Mutual fund redemption is the method by which an investor can withdraw the money deposited in a mutual fund whenever he wants, so friends, in today's topic, we will know what is mutual fund redemption, and what is the process of redeeming mutual funds.
What is Mutual Fund Redemption?
Friends, if your money is deposited in mutual funds, then whenever you feel that you need the money deposited in your mutual fund, then you need to sell your mutual fund, in such a case of mutual fund The process of selling mutual funds in the US is called mutual fund redemption.
You can also call Mutual Fund redemption selling a mutual fund unit.
Mutual Fund Redemption Methods
Mutual funds can be redeemed in two ways, first - offline, and second online, let us now know about these two methods in a little detail.
Offline Mutual Fund Redemption
To redeem a Mutual Fund offline, the Unit Holder (Investor) has to submit that form to the Mutual Fund Company's office after filling the Redemption Request Form and making the necessary signature on it.
Things to keep in mind in offline Mutual Fund Redemption
You get the application form, from the company's office, or download it from its website and print it out and fill it up.
On the mutual fund redemption form, you have to fill some necessary details, such as – name of the unit holder, folio number, scheme name and details of the mutual fund plan, as well as you have to tell how many units of the mutual fund you want. Want to redeem, or want redemption of how much rupees.
In this way, when you fill the mutual fund redemption form and submit it to the mutual fund office (AMC or Registrar office), then as soon as the mutual fund company approves your application, then the mutual fund in the account of the first unit holder. The money to redeem the fund gets deposited.
When your application is approved, then money gets deposited in your account within three days.
Online Mutual Fund Redemption
In today's internet and mobile banking era, most of the mutual fund companies offer the option to buy and sell (redeem) their mutual fund schemes online.
Therefore, even sitting at home, with the help of internet, the mutual fund you want to buy or sell (redeem), you have to go to the scheme website of that mutual fund company and fill the online mutual fund redemption form.
Some steps of online mutual fund redemption
You have to open the “online redemption” or “online transaction” page on the website of the mutual fund company.
You have to log in with Mutual Fund Folio, or PAN number, or fill up the form given online and submit it.
Confirmation of successful submission of your form will come on your email or mobile.
And as soon as your application is approved, then the mutual fund company will deposit your money in your account.
Things to keep in mind before Redeeming Mutual Fund
Reason for Mutual Fund Redemption
The first thing you should keep in mind in mutual fund redemption is that why do you want to redeem that mutual fund?
There can be many reasons for you to redeem mutual funds, some reasons may be right and some reasons may be just emotional decisions.
Therefore, when you think of selling or redeeming mutual funds, keep in mind that your reason should not be emotional.
For example, the market is not doing well, and the value of your mutual funds is decreasing.
You should keep in mind that mutual funds are managed by professional and experienced people of the stock market, and the stock market is subject to price fluctuations in the short term.
That's why you need to stay in the market in such a time.
Current NAV of Mutual Fund
Once you think that – you actually have to redeem mutual funds, you should keep in mind that your mutual fund is redeemed or sold only at the current NAV price, and the NAV price changes daily, so At the time of mutual fund redemption, keep in mind the current NAV, this is very important.
Mutual Funds with Lock in Period
Whenever you think of redeeming mutual funds, keep in mind that what is the lock-in period of your mutual fund.
LOCK IN PERIOD means that at least for how many days you have to keep money in that mutual fund.
Like – CLOSE ENDED FUND has a fixed time lock in period, while OPEN ENDED FUND can be REDEEM at any time.
And Equity Linked Savings Scheme (ELSS) fund cannot be redeemed before 3 years.
Mutual Fund Exit Charges and Taxes
Whenever you want to redeem the mutual fund, then before that keep in mind the fee involved in redeeming that fund, this fee is also called EXIT FEE, or EXIT LOAD, as well as the cost of EXIT. It is also important to keep in mind the taxes involved.
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