VR Logo

With the market at an all-time high, is this the right time to switch from a regular plan to a direct plan?

One needs to minimise the applicability of exit loads and capital-gain taxes while switching between funds, suggests Ashutosh Gupta

Two years back, I invested in the regular plans of four funds. Now I am planning to switch to direct plans. With the market at an all-time high, is it the right time to do the switch?
- Vinayak Kamath

I think he can go ahead with this switch. But as we've often said, the only things that he should be mindful of are the applicability of exit loads and capital-gain taxes. So, he should try and plan his switch in a way that helps him minimise any load incidence and the applicability of capital-gain tax.

In fact, we are right now coming towards the end of the financial year. And he may be able to benefit by splitting his switch between this financial year and the next one. By doing that, he will be able to benefit from the capital-gain tax exemption threshold limit of Rs one lakh each for the two financial years.

So broadly, those are the kind of considerations that he should keep in mind and depending upon the scale of his investment or the accumulated gains that he has in his portfolio, it might just be worthwhile to plan his switch in two or three blocks rather than doing it all at one go.

Post Your Query