Investors should really ideally stick to their strategic asset-allocation which in turn depends on their threat appetite.
I am seeing a lot of fluctuations in my total worth of equity investments carried out by means of SIP. Should I redeem some so that the loss is minimised even though I do not want any revenue now? —Rajiv Bhushan
Equities are the most favoured asset class for wealth generation more than the extended term, with the prospective to provide superior inflation-adjusted returns compared to fixed-earnings. Equities are more volatile than most asset classes with even possibility of a capital loss or drawdown more than the brief-term. However, as the holding period increases, the threat of capital loss diminishes.
More not too long ago, markets have faced some resistance amid profit-booking at higher valuations, issues about increasing interest prices and a resurgence in Covid -19 infections domestically and across the globe. Recent market place events have led to improved volatility which is also reflected in the market place worth fluctuations of your investments.
You should really continue to keep invested if you have a extended investment horizon, and can even look to allocate additional when such corrections take place as these present an chance to purchase units at less costly costs. Investors should really ideally stick to their strategic asset-allocation which in turn depends on their threat appetite (capacity and willingness to take threat) and not attempt and time the markets.
I have invested in two equity funds for more than eight years. I want to redeem some revenue each and every month. How can I withdraw the revenue each and every month and what will be the tax implication of the withdrawal? —Alok Sharma
You can opt for withdrawing some portion of your accumulated corpus by way of the systematic withdrawal program (SWP) route. The redeemed proceeds are topic to capital gains tax (brief-term or extended-term) based on the holding period and asset-class orientation of the scheme invested in (equity/fixed-earnings / commodities). Given you have invested into equity schemes for more than eight years, the withdrawal amounts corresponding to units held more than one year would probably attract extended-term capital gains tax at the price of 10% (excluding cess, and any surcharge if applicable) on capital gains in excess of Rs 1 lac per annum. For units held for periods up to one year, brief-term capital gains tax is levied at 15%.
The writer is director, Investment Advisory, Morningstar Investment Adviser (India). Send your queries to