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Summary: This piece addresses whether to move profits from an equity fund into a liquid fund. It outlines specific circumstances when exiting equity investments makes sense, and when staying invested is the better choice.
I've earned significant returns on my equity investments over the past three years. Should I now move the proceeds to a liquid fund and book profits? – Anonymous
Whether you should shift your equity investments to a liquid fund depends on when you'll need the money.
Consider moving to a liquid fund if:
- You'll need the money within the next 6-12 months
- You've achieved, or are close to achieving, a specific financial goal
- Your equity fund has consistently underperformed its peers and category for at least three years (base this on three-year performance, not one or two years, since short-term returns can be misleading)
Stay invested in equity if you don't need the money for at least five years
Exiting now could undermine long-term wealth creation. Since accurately predicting market movements is difficult, staying invested regardless of current conditions is generally the wiser approach.
Rather than trying to time the market, build an asset allocation plan and rebalance your portfolio regularly. This disciplined approach is the most reliable way to book profits over time.
Also read: Should you invest surplus income in liquid funds?
This article was originally published on September 11, 2024, and last updated on July 15, 2026.
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