I am planning to invest in an equity diversified fund through monthly SIP for 8 to 10 years. I have all the required information on the fund selection, historical performance etc, but I want to know when should I exit the fund? Is it a good idea to keep a target return for every 2 to 3 years, exit when the target is reached and re-invest?
-Raviprasad
Approaching your investments in mutual funds like a trader with a stop-loss and profit booking targets will prevent you to benefit from long-term disciplined investment in equities.
If you book profits intermittently, the gains will not be as high as they could be after investing regularly.
Instead, choose a good fund and invest regularly. You should be selling your investments well before you need the money for a goal to lock in your gains from equity.
This article was originally published on July 03, 2013.
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