Mutual Fund Selling: Which Mutual Fund Should You Sell First? The loss making a?
You need to think about how a query like that can be answered without portfolio details. You are right that the answer to this question depends on the investments made by the investor. Any decision made without considering the details of the investment would do more harm. For example, your decision would be different if you liquidate your investments in an emergency or if you rebalance your portfolio.
As said before, each wallet is unique in its own way. The investor may have built it in a particular way to suit his needs. So, keep in mind that various options may offer you some guidance, but the final decision should only be made after considering your needs.
Since most investors are taking losses these days, consider the scenario. According to mutual fund advisors, most investors are comparing apples to oranges and are on the verge of making buy or sell decisions. Let’s take the example of a portfolio consisting of a large cap scheme, a small cap scheme and a computer scheme. As you might guess, computer schematics have lost most recently. Small cap plans also lost more money than large cap plans.
What would you sell in such a scenario? First, basing your decision on recent losses could be a mistake. A sector program like IT or a small cap program always falls the most in a volatile market. This shouldn’t shock or surprise you. However, you may consider selling them if you cannot cope with the volatility. Many advisors have told new investors to get rid of schemes that make them lose sleep. This is just a correction: you have visibly overestimated your risk-taking capacity in the bullish phase and taken aggressive bets.
What to do if you’re a seasoned investor confused by sudden negative market sentiment. Well, the market is entering a crucial phase. Even without a Russian invasion, it was already facing interest rate hikes, tight liquidity, rising oil prices, likely virus waves, and more. Most fund managers have urged investors to be cautious in this new year in the market. Many also said investors shouldn’t expect higher market returns this year and shouldn’t take unwanted risks. So your high-risk investments are likely to be in the red.
If you are wondering about rebalancing your portfolio, you can continue. You can sell your loss-making plans if you want to save on taxes. You can also consider your portfolio if all plans gain or lose money the same way. You can sell part of your investments if your portfolio is oriented towards a particular program or sector.