I have several ongoing SIP’s in Equity Mutual Funds. I wanted to know if I withdraw Rs. 1 lakh when the fund reaches a level of one lakh twenty thousand and continue with the SIP will it affect my returns since there is no compounding effect in Mutual Funds or even shift the said amount to a debt fund?
The idea of investing in mutual funds through SIPs is to create long term wealth by saving a small amount every month by remaining disciplined and by benefiting from compounded returns over a long period of time. SIPs also help you accumulate a desired corpus for meeting your long term goals.
Please read more about this https://www.advisorkhoj.com/articles/mutual-funds...
Your idea to withdraw the accumulated amount whenever there is some profit is completely against the idea of SIP investing. Please note that if you withdraw the amount whenever there is some growth, then how you are going to create wealth? When there is no investment how you are going to get returns, have you ever thought of this?
If you implement this investment idea then neither you will be making adequate returns on your investments nor will you be able to save adequately for meeting your future financial goals.
Also, the return of debt mutual fund is comparable to fixed deposits whereas returns of equity mutual funds are best compared to any other asset class. Therefore, shifting your investments from the best investment class to a lower yielding product/ asset class is not at all a good decision.
Hope we could explain you how it is beneficial not to withdraw from your SIPs. Wishing you the best!
