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Ideal Time To Redeem

If you feel there won't be a need for money over the next 2 to 3 years, remaining invested in equities can bring home handsome gains

I started investing in mutual funds through the SIP route in June 2005 in HDFC Core & Satellite (G), HDFC Premier Multicap (G) and Prudential ICICI Infrastructure (G). As of now the inflows into the above funds have stopped and a fresh SIP in HDFC Equity (G) and Reliance Growth (G) has been instituted. I want to know when would be the ideal time to withdraw money from the three funds. How is my fund selection? I intend to hold these funds for six years
- Taj Singh

Keeping your asset allocation time-based works the best. This means that if you need the money in say about a year's time, you could look at redeeming the funds and investing them in a safer instrument like a one year fixed deposit. If your investment horizon is a little longer then you could consider booking partial profits and moving these funds into a debt fund. However, if you don't see the use of these funds over a longer period of three or more years then you could remain invested in equities. The point is that you should always spread your investments across different asset classes according your time horizon of investment. And since equities tend be less risky over a longer duration, it is an attractive asset class for long-term investments.

With a six year investment horizon, you can continue to remain invested in equities. Of course, if the markets make you nervous during their fall, you could look at booking partial profits.

The new funds selected by you have a stellar performance track record and you can continue investing in them.

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