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Should I redeem my three-year-old SIP?

Dhirendra Kumar talks about when one should exit equity investments.

I started my SIP three years ago, with the investment of Rs 5000 each in two equity funds. Should I redeem my SIP or continue it? If I redeem it now, what will be my losses?
- Keshav

First, your statement of account for each of the funds will help you know the exact worth of your SIPs as on date.

Also, one should not compare equity investments with that of fixed deposits. Fixed deposits have a definitive term of investment, such as three years or so after which, you can take out all the money from it. However, funds invested in equity should be kept for a minimum period of five years. This helps investors have better returns than those of fixed income.

Also, one should redeem equity investments only for two reasons. First, if one requires that money. Second, if the fund that one has invested in is performing badly. For judging the performance of your fund, don't just check whether it has delivered negative returns or not, as this may be because of the overall market condition. Only when your fund's performance is lower than that of its peers in the category over the long run, you should exit the same. Don't get worried by temporary underperformance of your fund, rather look at its long-term performance as compared to its peers.

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