Mutual Fund withdrawal: How can I withdraw money from SIP during COVID-19?

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Updated: May 12, 2020 10:22 AM

SIP enables an investor to average out the cost of his investments via disciplined purchases, particularly when the market is down.

Mutual Fund SIP, covid 19,cash crunch, how to withdraw money from SIP, mutual fund, equity MF, SIP returnsTypically, AMCs send reminders towards the end of your SIP term and also an SIP registration form at your address.

How can I withdraw money from my systematic investment plan as I am facing some cash crunch now?
—D K Raghavan

You can withdraw your investments periodically unless they are under the lock-in period. You can withdraw via SWP (systematic withdrawal plan) route by redeeming a fixed amount at a given frequency. You may withdraw a lumpsum amount via a redemption request as and when required. Funds usually have minimum withdrawal amounts specified in their disclosure documents. Be sure that the units being withdrawn are not under exit load period.

I plan to invest Rs 10,000 every month for five years in equity MF through SIP. How should I select a fund?
—Srijit Roy

An asset allocation-based approach (mix of equity and debt) should be followed. The allocation to equity (high risk – high return asset class) should depend on your risk appetite and time horizon. For your equity allocation, you may consider investing across large caps (75%), midcaps (15%) and smallcaps (10%). You can consider two funds in the large-cap space, and one fund each for the midcap and small cap exposure.

My SIP for five years will end in June. What do I have to do to continue the SIP for another five years?
—Mihir Anand

You need to re-register an SIP to continue the periodic investments, if a fixed period was selected for investment at time of registering for the SIP. You may re-register online or through the physical mode. Typically, AMCs send reminders towards the end of your SIP term and also an SIP registration form at your address.

I am unhappy with my SIP returns for the past three years, should I stop?

—Amit Kumar

SIP enables an investor to average out the cost of his investments via disciplined purchases, particularly when the market is down. You get more units while prices are down. Hence, you should continue your SIP if you are investing for the long term (more than seven to ten years) as you would benefit from buying units cheap. You should evaluate the performance of the fund vis-à-vis that of its peers. If a fund has been performing poorly on a consistent basis, you may switch to a better performing one.

The writer is director, Investment Advisory, Morningstar Investment Adviser (India). Send your queries to fepersonalfinance@expressindia.com

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