Mutual Funds have gradually become one of the more appealing ways to invest money and are becoming one of the favoured investment alternatives for ordinary investors. These preferences result from the ease of investing in Mutual Funds and the large selection of Mutual Fund schemes available to investors.
Mutual Funds may offer high liquidity and simple entry/exit choices depending on the type of fund selected. Therefore, you always have the option to liquidate your Mutual Fund assets in case of an emergency.
In this blog, we will learn more about the process of withdrawing money from your Groww account and the procedure of redeeming units from Mutual Funds in case of an emergency.
How Do You Withdraw Money from Mutual Funds?
A Mutual Fund plan's money withdrawal procedure is pretty simple, with several methods to redeem your cash. These methods are listed below-
Utilizing a Broker or Distributor
If you invested through a broker or distributor, you could withdraw money from a Mutual Fund plan through them. Contacting your broker and requesting a withdrawal are options. You must complete and submit a withdrawal request form if you want to withdraw offline. The state would be given to the Asset Management Company by the broker.
On the other hand, you may also redeem online if the broker provides a service online through a site or mobile app. For example, logging into your Mutual Fund account will allow you to make a withdrawal request, which will be processed instantly once you choose the withdrawal option and input the number of units you want to remove.
Directly Using Your Trading & DEMAT Accounts
You can withdraw money from your DEMAT and Trading Accounts if you utilize them to invest in Mutual Fund schemes. First, enter your account, choose the amount you want to withdraw, and submit your request to verify your Mutual Fund investment. Once the bid has been verified, the redemption will be performed, and the money will be paid to your connected bank account.
Using the Asset Management Company
Your Mutual Fund plan can be redeemed directly with AMC. You can make an offline withdrawal request in person at an AMC branch office or online. In addition, you can easily find redemption by visiting AMC's official website or downloading its mobile app.
The Assistance of The Registrar and Transfer Agent
The Registrar and Transfer Agent may help you invest in and withdraw from Mutual Fund schemes. You can start your money by making a withdrawal request to the Registrar and Transfer Agents locally or online.
How Do You Withdraw Money from Mutual Funds Online?
You may also redeem your Mutual Funds online by going to the Mutual Fund's official website. You could save it there if you purchased a Mutual Fund through a third-party Mutual Fund website.
- On the website, you must select the “Online Transactions” option.
- Next, your Folio Number and Permanent Account Number are required to log onto the website and access your Mutual Fund.
- The next step is to pick your Plan and the Number of Units you wish to redeem.
- The final step is for you to Confirm your transaction.
Factors to Consider While Submitting a Mutual Fund Redemption Request
Although a redemption request may be made due to financial requirements, there are a few crucial considerations to make while doing so:
Whether you redeem your funds at a specific period depends significantly on the sort of fund you invested in. For instance, you can only redeem close-ended products like ELSS or fixed maturity funds when their lock-in term has passed.
There are lock-in periods for several Mutual Fund types. For example, consider the 3-year lock-in period for ELSS (Equity Linked Savings Scheme) funds. Similar to this, solution-oriented programs have a 5-year lock-in term, or until the participant reaches retirement age or the age of majority.
Before the lock-in period is ended, the investor cannot liquidate the investments. Investors should thus take the expiration of the lock-in period into account when considering Mutual Fund redemption.
Specific Mutual Fund schemes require investors to pay an exit load if the units are redeemed before the designated term. Such exit burden is assessed on the NAV of the redemption, and as a result, it directly influences the returns of the entire portfolio. Delaying the redemption request until the conclusion of the exit load window may be wise if you want to safeguard the portfolio returns.
The Holding Period of The Mutual Funds
Short-Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG) from Mutual Fund investments are taxed at different rates. LTCG tax rates are typically lower than STCG to encourage long-term investing by taxpayers.
Based on the holding term of such Mutual Fund units, the gains are divided into LTCG and STCG categories. One must be careful to take care of the redemption request if it can be postponed until the payments are long-term, in which case it is advised to do so. Any tax savings immediately affect the total portfolio returns positively.
Conclusion
In conclusion, your Mutual Fund holdings may be a quick source of cash if you require it immediately. Investments in Mutual Funds can be partially or fully redeemable in unit or monetary terms.
Investments in Mutual Funds offer flexibility in terms of redemptions in this sense. We hope you learned how to withdraw funds from a Mutual Fund and if you should do so in person or online.
FAQs
What is mutual fund withdrawal process? The mutual fund withdrawal process involves submitting a redemption request through the fund house's online portal or physical form, specifying the number of units or amount to be redeemed, followed by the crediting of funds to the investor's registered bank account.
What is the process of getting your money out of a mutual fund called? ›
This process of exiting from the mutual fund scheme is called mutual fund redemption. Investors can either choose to redeem specific units or can exit the mutual funds entirely. Selling mutual funds follow a different model compared to selling shares of stock or exchange traded funds (ETFs).
How to sell mutual funds interview questions? ›
Mutual Funds
- Explain what do you mean by private equity transactions? ...
- Explain what is equity funding? ...
- Explain what is weighted average rating factor? ...
- Explain what is call option? ...
- Explain what is Option trading? ...
- Explain how options are different than equities?
Can you pull money out of a brokerage account? Yes, you can pull money out of a brokerage account with a bank account transfer, a wire transfer, or by requesting a check. You can only withdraw cash, so if you want to withdraw more than your cash balance, you'll need to sell investments first.
How to get out of mutual funds? ›
4 steps to selling a mutual fund
- Contact your financial advisor or mutual fund company. Get in touch with the advisor who sold you the fund, or someone in their company. ...
- Ask about any fees or charges. ...
- Decide how many units or shares you want to sell. ...
- Give instructions on what to do with the money.
Some equity and bond funds settle on the next business day, while other funds may take up to 3 business days to settle. If you exchange shares of one fund for another fund within the same fund family, the trade will usually settle on the next business day.
Do you pay taxes when you withdraw from a mutual fund? ›
Distributions and your taxes
If you hold shares in a taxable account, you are required to pay taxes on mutual fund distributions, whether the distributions are paid out in cash or reinvested in additional shares. The funds report distributions to shareholders on IRS Form 1099-DIV after the end of each calendar year.
How are mutual funds paid out? ›
The payable date is usually a few days after the record date to permit computation and printing checks to send to shareholders. Distributions can be paid using cash, i.e., by sending a check to the shareholder. Most mutual fund companies give the option of using this cash to purchase additional mutual fund shares.
What is the right of withdrawal of a mutual fund? ›
withdraw from an agreement to buy mutual fund units within two business days after you receive a simplified prospectus or Fund Facts document, or. cancel your purchase within 48 hours after you receive confirmation of the purchase.
Are mutual funds hard to sell? ›
When an investor sells mutual fund shares, the redemption process is straightforward, but there might be unexpected charges or fees. Class A shares usually have front-end sales loads, which are fees charged when the investment is made, but Class B shares may impose a charge when shares are sold.
Selling mutual fund shares
Mutual fund shares are sold the same way that they're bought: either through the fund company directly or through your broker. You'll receive the next available net asset value as your price for each share sold. You'll also have to pay any applicable fees or charges.
Is it a good time to sell mutual funds? ›
However, if you have noticed significantly poor performance over the last two or more years, it may be time to cut your losses and move on. To help your decision, compare the fund's performance to a suitable benchmark or to similar funds. Exceptionally poor comparative performance should be a signal to sell the fund.
How to withdraw money from mutual funds? ›
Utilizing a Broker or Distributor
If you invested through a broker or distributor, you could withdraw money from a Mutual Fund plan through them. Contacting your broker and requesting a withdrawal are options. You must complete and submit a withdrawal request form if you want to withdraw offline.
How do I withdraw my funds? ›
Use an ATM
Every ATM is slightly different but you simply insert your debit card, enter your PIN (personal identification number), select the account you wish to withdraw money from (if you have more than one), enter the amount, and then wait for the ATM to give you your cash and a receipt.
What is the best time to withdraw mutual funds? ›
When it comes to equity, it is very important that, especially when you are thinking about long-term goals, you want to exit as soon as you have 2-3 years left approaching your goal and there are just 2-3 years to get there. That is number one.
Can you pull out of a mutual fund at any time? ›
Mutual funds are liquid assets, and as long as you invest in open-end schemes, be they equity or debt, it's easy to withdraw your investments at any time. Moreover, there are no restrictions.
How much tax will I pay if I cash out my mutual funds? ›
Short-term capital gains (assets held 12 months or less) are taxed at your ordinary income tax rate, whereas long-term capital gains (assets held for more than 12 months) are currently subject to federal capital gains tax at a rate of up to 20%.
What are the charges for mutual fund withdrawal? ›
The exit load is charged to discourage investors from redeeming their investment too early, giving their investment ample time to work for them. Mutual funds charge an exit load of anywhere, generally between 0.5% and 2% of the NAV (the highlighted tax is not from tax point of view).
