How Can You Redeem Your Money from Mutual Funds?

Learn how you can withdraw your money from mutual funds online and offline

<div class="paragraphs"><p>Source:&nbsp; on Unsplash</p></div>
Source: on Unsplash

One of the biggest advantages offered by mutual funds is liquidity. They give you the freedom to redeem your investments. In mutual funds, the term redemption means withdrawing your investment from the fund. As an investor, you may choose to redeem your money from a mutual fund for various reasons like the requirement of funds, if the fund is not delivering the desired returns, if you meet your investment objective, etc.

Irrespective of your reason for withdrawing from the mutual fund, the fund house will offer you the option to redeem your investment. The redemption of mutual funds is as easy as investing in them. In this article, we will discuss how you can redeem your money from mutual funds. Let’s get started.

How to Withdraw Money from Mutual Funds?

You can redeem your mutual fund through the following methods:

  • Through the asset management company (AMC)

  • Through your agent

  • Through your Demat account

Redemption Through the AMC

If you had invested in the mutual fund directly from the AMC, you can redeem your investment online by logging in to their web portal using the credentials provided to you at the time of purchase. You can choose to redeem all your mutual fund units or withdraw from the fund partially. If you redeem all the units, your account with the AMC will be closed. If you wish to redeem your units through the AMC using an offline process, you will have to submit the duly filled redemption form to the fund house.

Once your redemption request is processed, your money will either be transferred to your bank account via NEFT, or a cheque will be sent to your registered address.

Redemption Through Your Agent

If you had invested in the mutual fund through an agent, you will have to redeem your money through the same agent. The agent will ask you to fill a mutual fund redemption form with the details of your investment like the name of the mutual fund scheme, the folio number, the number of units to be redeemed, etc. The agent will then submit the form to the fund house. The mutual fund house will then credit the redemption account to your registered bank account or send a cheque to your address.

Redemption Through Your Demat or Trading Account

You can also redeem your mutual fund units through your Demat account if you had invested using the same account. As the entire process of redemption, in this case, is online, the withdrawal amount is directly transferred to the bank account that is registered with the trading/Demat account.

Things to Remember While Redeeming Your Money from Mutual Funds

Here are a few things you must know about the redemption of mutual funds:

  • Some mutual funds may levy an exit load if the funds are withdrawn from the mutual fund before a certain specified period of time. This exit load may be a nominal percentage of the asset value.

  • Some AMCs may have a minimum amount for redemption. Hence, you must read all the scheme-related documents carefully before investing in a mutual fund.

  • Gains from your mutual fund investments may attract capital gains tax based on the investment tenure. Hence, before you apply for the redemption of your mutual fund units, you must consider the tax implications of withdrawing your investment.

  • You must plan your mutual fund redemption well in advance if the funds are required for a specific purpose. This is because it may take 2-4 working days for the redemption amount to be credited to your account.