How Do You Withdraw Money From Mutual Funds?

26 February 2024
4 min read
How Do You Withdraw Money From Mutual Funds?
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Mutual Funds have gradually become one of the more appealing ways to invest money and are becoming one of the favoured investment alternatives for ordinary investors. These preferences result from the ease of investing in Mutual Funds and the large selection of Mutual Fund schemes available to investors.

Mutual Funds may offer high liquidity and simple entry/exit choices depending on the type of fund selected. Therefore, you always have the option to liquidate your Mutual Fund assets in case of an emergency.

In this blog, we will learn more about the process of withdrawing money from your Groww account and the procedure of redeeming units from Mutual Funds in case of an emergency.

How Do You Withdraw Money from Mutual Funds?

A Mutual Fund plan's money withdrawal procedure is pretty simple, with several methods to redeem your cash. These methods are listed below-

  • Utilizing a Broker or Distributor

If you invested through a broker or distributor, you could withdraw money from a Mutual Fund plan through them. Contacting your broker and requesting a withdrawal are options. You must complete and submit a withdrawal request form if you want to withdraw offline. The state would be given to the Asset Management Company by the broker.

On the other hand, you may also redeem online if the broker provides a service online through a site or mobile app. For example, logging into your Mutual Fund account will allow you to make a withdrawal request, which will be processed instantly once you choose the withdrawal option and input the number of units you want to remove.

  • Directly Using Your Trading & DEMAT Accounts

You can withdraw money from your DEMAT and Trading Accounts if you utilize them to invest in Mutual Fund schemes. First, enter your account, choose the amount you want to withdraw, and submit your request to verify your Mutual Fund investment. Once the bid has been verified, the redemption will be performed, and the money will be paid to your connected bank account.

  • Using the Asset Management Company

Your Mutual Fund plan can be redeemed directly with AMC. You can make an offline withdrawal request in person at an AMC branch office or online. In addition, you can easily find redemption by visiting AMC's official website or downloading its mobile app.

  • The Assistance of The Registrar and Transfer Agent

The Registrar and Transfer Agent may help you invest in and withdraw from Mutual Fund schemes. You can start your money by making a withdrawal request to the Registrar and Transfer Agents locally or online.

How Do You Withdraw Money from Mutual Funds Online?

You may also redeem your Mutual Funds online by going to the Mutual Fund's official website. You could save it there if you purchased a Mutual Fund through a third-party Mutual Fund website.

  • On the website, you must select the “Online Transactions” option.
  • Next, your Folio Number and Permanent Account Number are required to log onto the website and access your Mutual Fund.
  • The next step is to pick your Plan and the Number of Units you wish to redeem.
  • The final step is for you to Confirm your transaction.

Factors to Consider While Submitting a Mutual Fund Redemption Request

Although a redemption request may be made due to financial requirements, there are a few crucial considerations to make while doing so:

  • The Type of Fund

Whether you redeem your funds at a specific period depends significantly on the sort of fund you invested in. For instance, you can only redeem close-ended products like ELSS or fixed maturity funds when their lock-in term has passed.

  • The Lock-In Duration

There are lock-in periods for several Mutual Fund types. For example, consider the 3-year lock-in period for ELSS (Equity Linked Savings Scheme) funds. Similar to this, solution-oriented programs have a 5-year lock-in term, or until the participant reaches retirement age or the age of majority.

Before the lock-in period is ended, the investor cannot liquidate the investments. Investors should thus take the expiration of the lock-in period into account when considering Mutual Fund redemption.

  • The Exit Load

Specific Mutual Fund schemes require investors to pay an exit load if the units are redeemed before the designated term. Such exit burden is assessed on the NAV of the redemption, and as a result, it directly influences the returns of the entire portfolio. Delaying the redemption request until the conclusion of the exit load window may be wise if you want to safeguard the portfolio returns.

  • The Holding Period of The Mutual Funds

Short-Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG) from Mutual Fund investments are taxed at different rates. LTCG tax rates are typically lower than STCG to encourage long-term investing by taxpayers.

Based on the holding term of such Mutual Fund units, the gains are divided into LTCG and STCG categories. One must be careful to take care of the redemption request if it can be postponed until the payments are long-term, in which case it is advised to do so. Any tax savings immediately affect the total portfolio returns positively.

Conclusion

In conclusion, your Mutual Fund holdings may be a quick source of cash if you require it immediately. Investments in Mutual Funds can be partially or fully redeemable in unit or monetary terms.

Investments in Mutual Funds offer flexibility in terms of redemptions in this sense. We hope you learned how to withdraw funds from a Mutual Fund and if you should do so in person or online.

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