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When to Book Profits?

Invest with a goal and book profits when it is achieved

My mutual fund portfolio is showing positive gains. Should I book profits?
- Radha Shenoy

Congratulations. One feels good viewing investment gains. However, you need to ask yourself what you plan to do with the booked profits? If you are thinking of investing them again, you need to ask yourself why you had made the investments in the funds that you plan to book profits.
Investing should be done with a financial goal, and once the goal is achieved the accumulated funds should be used to meet the goal. If you have to re-invest the profits, 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.

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