InvestorQ : When should I sell my mutual funds?
Swapnil Sarang made post

When should I sell my mutual funds?

1 year ago
The mutual fund you choose and the target that needs to be set all depend upon the underlying goal. Without a specific financial goal in mind, investing in mutual funds does not serve a valuable purpose. Thus, in order to figure out the target for your mutual fund, it is important to prioritize which goals need to be fulfilled. The general goals that people have in mind while investing in mutual funds are - car, home, and exotic holiday, apart from the education of your children and retirement.

Even these goals can be categorized based on the time periods they need to be fulfilled in. For eg- f you wish to plan for higher education for your child who is aged three years now, you have 15 years, and it is considered a long-term goal. If you wish to buy a car in the next 2 years, that qualifies as a short-term goal. 

Now that you have understood this, let us go ahead and decipher how to set a target. The first step is identifying the goal for which you wish to invest and the time you have to reach it. Once done, find the cost of the goal today. Add a reasonable amount of inflation to that, which will tell you the cost of the goal in the year you wish to accomplish that. Decide the asset class with suits you (with the help of a financial advisor if required), work backward, and calculate the amount you could save via SIP or lumpsum or a combination of both to reach the goal.

Linking mutual funds to a goal will ensure that that you are disciplined enough with your investments and also ensures that you realize the cost of disrupting your goals. Monitoring the performance of your mutual funds is the best way to align with your goals. Liquidity should be available when you need it for your goals. Review your long-term goals every 3-5 years to confirm that you are on track vis-à-vis goalposts.