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Should I book profits to get rid of knee-jerk reactions?

Dhirendra Kumar discusses the approach towards withdrawing your money

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Is there any definite period after which, investors should book profits while continuing the SIPs in order to get rid of knee-jerk reactions in the market?
- Amrita Banerjee

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No, the markets always behave erratically and you shouldn't react to the market. The real problem is that if, for once, you succeed in timing the knee-jerk reactions, your overconfidence may make you miss out on big moves. All the big declines and surges in the market happen when you least expect them to. With an SIP, it is possible to be regular with your investments.

Having a withdrawal plan completely depends on your requirements. If you are systematically accumulating your money for a specific goal, then map a withdrawal plan for six to 12 months, depending on the magnitude of the amount, before the completion of the goal. This will ensure that you are not left at the mercy of the market for the achievement of your goal.

It is extremely advantageous to keep things simple - do your SIPs, increase your SIPs in line with the rise in your income and methodically, exit before the goal completion. Otherwise, let the money be there.

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