Profit Booking

I have recently booked profits on my fund investments. Is it the right time to invest in mutual funds again?
- Usha

It is excellent if your mutual fund investments have gained and you have booked profits. However, you are facing the trouble with profit booking that many investors face—what to do with the profits? If you are thinking of investing it again; you need to ask yourself why you had made the investments in the funds that you booked profits in.

Investing is done with a financial goal; once the goal is achieved the accumulated funds are used to meet the goal. If your decision to book profits is to re-invest, you may land up investing in the same funds that you booked profits in. There is a lesson from this experience for you; invest with a goal and book profits only when there is a new compelling idea in which you wish to invest the gains.

Having a plan or a goal will also answer your other question on investing; there is no right or wrong time to invest in the markets. All you need is a clear idea on what the investment is for and the time that you need to invest to achieve the goal.

This article was originally published on February 03, 2011.