How to Withdraw Money from Mutual Funds?

Your Guide to Withdrawing Money from Mutual Funds

MUTUAL FUNDSMONEYINVESTMENT

focus photography of person counting dollar banknotes
focus photography of person counting dollar banknotes

Mutual Funds have emerged as one of the most appealing investment options for individuals, thanks to their simplicity, flexibility, and wide range of schemes to suit various financial goals. Among their many advantages, the ability to offer high liquidity and ease of entry and exit makes them a preferred choice for investors.

If you ever find yourself in a financial emergency, redeeming your Mutual Fund investments can be a quick solution. This blog explains how to withdraw money from your Groww account and redeem units from Mutual Funds, ensuring you’re prepared for any situation.

Steps to Withdraw Money from Mutual Funds

Withdrawing funds from a Mutual Fund scheme is straightforward and can be done in multiple ways. Let’s explore the different methods:

1. Through a Broker or Distributor

  • Offline Process: If you invested via a broker or distributor, you can submit a withdrawal request form through them. They will process the request with the Asset Management Company (AMC).

  • Online Process: Many brokers offer online platforms or apps. Simply log into your account, select the withdrawal option, and specify the number of units to redeem. The request will be processed instantly.

2. Using Trading & DEMAT Accounts

  • If you invested in Mutual Funds through a DEMAT account, you can log in to your trading platform.

  • Select the units or amount you want to withdraw, confirm your request, and the funds will be transferred to your linked bank account after the transaction is processed.

3. Directly via the Asset Management Company (AMC)

  • You can redeem your Mutual Funds directly with the AMC, either online or by visiting their branch office.

  • AMC websites or mobile apps typically offer a seamless process for initiating withdrawal requests.

4. With the Help of Registrar and Transfer Agents (RTAs)

  • RTAs like CAMS or Karvy provide services to invest in and redeem Mutual Funds.

  • You can visit their local offices or use their online portals to initiate a redemption request.

How to Withdraw Mutual Funds Online

If you prefer to handle your investments digitally, withdrawing Mutual Funds online is a convenient option. Here’s how you can do it:

  1. Visit the Mutual Fund’s official website or the third-party platform where you purchased the fund.

  2. Navigate to the “Online Transactions” section.

  3. Log in using your Folio Number and Permanent Account Number (PAN).

  4. Choose the specific plan and the number of units you want to redeem.

  5. Confirm the transaction to complete the process.

Key Factors to Consider When Redeeming Mutual Funds

Before submitting a redemption request, it’s crucial to evaluate the following:

1. Type of Fund

The ability to redeem your investment depends on the type of Mutual Fund. Close-ended funds, like ELSS or fixed maturity plans, can only be redeemed after the lock-in period ends.

2. Lock-In Period

Many Mutual Funds have lock-in periods (e.g., ELSS has a 3-year lock-in). Solution-oriented funds may have a 5-year lock-in or extend until a specific milestone, like retirement. Ensure the lock-in period has expired before initiating redemption.

3. Exit Load

Some schemes charge an exit load if you withdraw funds before a certain period. This fee reduces your returns, so it’s advisable to wait until the exit load period ends, if possible.

4. Tax Implications

  • Short-Term Capital Gains (STCG): Taxed at a higher rate for redemptions within a short holding period.

  • Long-Term Capital Gains (LTCG): Taxed at a lower rate to encourage long-term investments.
    Holding your investments for a longer period can help you save on taxes, positively impacting your overall returns.

Conclusion

Mutual Funds provide a reliable and flexible option to meet your financial needs, even during emergencies. Whether you choose to redeem your units partially or entirely, the process is designed to be simple and efficient.

Before making a withdrawal, consider factors like the lock-in period, exit load, and tax implications to maximize your returns. Armed with this knowledge, you can make informed decisions about your Mutual Fund investments.