InvestorQ : Is there any penalty amount if I withdraw the mutual fund in between?
Anjali Desai made post

Is there any penalty amount if I withdraw the mutual fund in between?

varsha Motwani answered.
3 years ago
If you have invested in mutual funds through the Systematic Investment Plan (SIP), there is no penalty as such, but you have to pay the exit load if the money is withdrawn before a certain period, generally, it is one year.

Exit load varies according to the mutual fund companies. It varies from 0.5%-1.5%. To avoid paying any exit load on your investment, make sure you stay invested for at least 1 year.

However, in case of general mutual funds, if you withdraw money before maturity, you are attracted to a lot of charges such as:

1.Back-end Sales Charges: Mutual fund companies charge front-end charges at the time of purchase and back-end charges at the time of sale to facilitate redemption of your mutual fund units. However, not all mutual fund companies have the same pattern for charging money from customers. It might differ in name and quantum.

2. Sales create tax events: Selling mutual fund shares triggers a tax-event that one would have avoided if shares were not sold. It is based on the profit or loss resulting from the sale.

3.IRA Mutual fund penalties: If you are younger than 59 ½ years, you might be assessed a 10% early withdrawal penalty.

The above-mentioned levies on your withdrawal of mutual funds are unavoidable. However, if there’s a necessity of funds, you can avoid paying penalty by borrowing money from some other source and paying little interest over it, rather than paying huge penalties. Also, you have to make a cost-benefit analysis in both scenarios.

AR Kadam answered.
3 years ago
There is exit load (penalty) if you withdraw mutual funds before the stipulated time period specified. Also the profits on investments (if any) previous 12 months will attract 15% tax and anything before 12 months will attract 10% tax w.e.f 1st Jan 2018

3 years ago


10% is case of premature withdrawal of mutual fund.

It can be raised to 25% in case of simple IRA plan .


You can WAIVER PENALTY in certain cases:

1- for medical emergency

2- educational purposes , etc.

# Kindly confirm this rights with your broker for better knowledge.

Note:- There is no guarantee in stock market ✌️.

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_Vikas Deliwala (Financial analyst)