What Should be your Mutual Fund Holding Period

Of course, you must hold your funds until it doesn’t attract an early redemption fee which is usually about 3 percent to 5 percent.

Furthermore, the minimum period to hold your funds to avoid a loss is at least one year. However, you can find an answer to your query with all-inclusive possibilities as mentioned below.

1. When you invest in a mutual fund, the fund manager keeps your money in equity/debt markets to reap good profits. In the process, the usual return is about 20 percent in a steadily rising stock market year on year.
2. Now coming to your query, you can hold a mutual fund depending on the return you anticipate on your investment. And, for the best returns, you must wait for a period of 6 to 8 years approximately on your investment.
3. Moreover, a good fund investment at the stock markets can yield an expected return of somewhere between 35% to 40%.
4. Circumstances may demand for an early withdrawal of funds then you can make either a partial or complete exit with a minimal loss.
5. Whenever you hold a fund for more than three years it becomes long-term funding and shall attract little exit load fees rather than making an early exit, in less than a year.
6. Therefore, from an investment point of view, you must be careful in selecting the nature of the portfolio, (sector-wise), an open-ended fund, or close-ended fund, and funds that support your taxating issues.
7. The entry fee, operating cost, and exit fee of a mutual fund vary depending upon the nature of the investment a fund manager makes.
8. As the performance of your invested equity fund is dependent on the stock markets, whenever your fund happens to perform low then you are advised to withdraw from the existing ones and place it into other benefiting funds.

Fund Withdrawals & the Penalty on the Withdrawn:

1. You can withdraw your investment in just 24 hours from the time of your investment provided the mutual fund units are allowed for its daily sale/repurchase. It is feasible because of its high liquidity in its asset class.
2. Your fund withdrawals are subject to a penalty when you are determined to make fund withdrawals within a year of its investment or make a withdrawal before attaining the age of 60 years.
3. In the above-stated circumstances, you will be asked to pay a penalty fee and in addition, certain investments shall even attract tax penalties based on the mutual investments in the shares.

Allocation of Mutual Funds in Class A, B, and C shares:

Class C shares are known to be ‘level-load’ and sometimes cost about 1 percent to purchase. They are expensive in annual maintenance as compared to Class A, or Class B shares.

Moreover, these mutual funds will charge you a fee of 1 percent when withdrawn in a year’s purchase.

Sometimes you may have to bear a burden of 3 percent to 5 percent on the investment value in Class A/Class B shares in the form of sales commission.

Companies that make huge investments keep the option of maintaining an investment in class A shares for at least one year. And, likewise, hold an investment in class B shares for six years. And, failing which, you are likely to lose from 3 percent to 5 percent against the early redemption fee.