How to redeem your investments in a liquid fund?

Investing in liquid funds can be a smart move for investors who need a high degree of liquidity and flexibility in their portfolios. These debt funds invest in short-term assets such as government securities, treasury bills, commercial papers, certificates of deposit, and securities that mature within 91 days.

Liquid funds are highly liquid, allowing investors to buy and sell their investments whenever required. This feature makes these funds ideal for those who prefer quick access to their funds during emergencies or who want to take advantage of short-term market opportunities. However, the question arises, what is the process to redeem your investments in a liquid fund?

Let’s go through the steps needed to withdraw your liquid fund investment, from filling in the redemption form to receiving your payment.

Check the exit load

Fund houses charge exit loads if you withdraw your mutual fund investment within a certain time period, known as the exit load period. For liquid funds, there is an exit load if you withdraw funds within seven days of investments.

Place a redemption request with the fund house

This can typically be done online or through the fund house’s mobile app. Calculate the redemption amount based on the number of units you wish to redeem and provide the bank details.

Wait for settlement

Once you have placed a redemption request, the payment is typically made within one working (T+1) day. However, the settlement period can vary from one fund to another and can range between 1-3 working days. During this time, your investment will be liquidated and the money will be credited to your registered bank account.

Today, most fund houses instantly transfer the proceeds to your bank account through an instant redemption facility. However, keep in mind that there is a monetary limit under IAF (Insta Access Facility). The highest amount you can withdraw is Rs. 50,000 or 90% of your investment’s latest value, whichever is lower.

Simply go to the website or app where you invested, click on instant redemption, request to sell your funds and the amount will be transferred to your account instantly.

Plan your next move

Once you have redeemed your investment, it’s important to plan your next move and explore more opportunities. If you need the money for a short-term goal, consider reinvesting it in another liquid fund. This will ensure continued liquidity and allow you to access your funds whenever needed.

If you don’t need the money immediately, you can invest in mutual funds or schemes with a longer investment horizon. This can potentially earn you higher returns over a longer period.

To wrap up

Redeeming liquid mutual funds is a simple and hassle-free process. At the same time, consider the various parameters that affect the redemption process such as cut-off timings, market risks, and exit loads. By keeping these factors in mind, you can redeem your liquid fund investment in a quick and efficient manner.

Also, stay updated with the latest market trends and approach your investments in a logical and calculated way. You can even seek advice from a financial expert for better decision-making. Their valuable insights can help you avoid emotional investing and align your investments with your goals.