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Can I Withdraw Mutual Fund Anytime

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12 Apr 2024

Mutual funds have become a preferred investment for individuals wishing to invest in the stock market without directly buying or managing the stocks. The most common question is whether one can withdraw mutual funds at any time. The answer is yes; however, there are certain things to keep in mind while withdrawing your mutual funds. Also, some types of mutual funds can be withdrawn only after a certain period. 

Let's understand more about this:

Can One Withdraw Mutual Funds Anytime?

  • Investments in open-end schemes are redeemable at any time. However, investments in the Equity Linked Savings Scheme (ELSS) carry some restrictions, as they come with a three-year lock-in period from the investment date.
  • Mutual funds are liquid assets, and as long as you invest in open-end schemes, be they equity or debt, it's easy to withdraw your investments at any time. Moreover, there are no restrictions. 

Is It Advisable To Exit From Mutual Funds At Any Time?

  • Withdrawing your mutual funds without investing them for long is not advisable. Moreover, the general thumb rule is to stay invested for four to five years to generate better returns in the case of equity funds. In the case of debt funds, two to three years is considered good.
  • When investing in mutual funds for the long term, it is advisable not to disturb your funds to keep them growing.  Market fluctuations are a normal part of investing, and it is important to stay the course and not panic sell. You can use a mutual fund calculator to see how your investment has performed over time, and to remind yourself of your long-term goals.

What Things Do You Need To Keep In Mind When Withdrawing Mutual Funds?

In an open-end scheme, here are a couple of things to keep in mind while withdrawing mutual funds:

  • Keep a note of the exit load. An exit load is a fee charged by asset management companies from investors when they exit, redeem, or withdraw funds. Usually, the reason behind such charges is to discourage investors from exiting the investment in the short term. 
  • Also, AMC might have a minimum amount for redemption. Hence, carefully review the terms and conditions before investing in any scheme. 

How To Withdraw Mutual Funds?

Withdrawing mutual fund money is easy, and there are several methods to do so, such as

1. With the help of a distributor or broker

If you have made any investment with the help of distributors or brokers, you can contact them. You can place a withdrawal request by completing and submitting a request form. 

You can also use a mobile app or website if your broker provides online services. So, you can log in to the particular app and send a withdrawal request. Then, enter the number of units you wish to redeem, and the request will be instantly processed. 

2. Using a Trading or DEMAT account

Log in to your account and withdraw the investments made using a trading or DEMAT account. Enter the amount or number of units you wish to withdraw. Then, send a request to verify your investments. Once verified, your amount gets credited to your registered bank account. 

3. With the help of the Asset Management Company (AMC)

With this method, you can directly redeem the funds with AMC. For offline withdrawals, visit the asset management company's office and complete the documentation. Else, you can avail yourself of AMC's online services and complete the redemption through their website or online app. 

4. With the help of the registrar and transfer agent

Registered under SEBI, such agents can also help you withdraw funds. You can reach a local RTA or complete the process online.

What Happens After Withdrawal?

  • Once you send a request for redeeming or withdrawing, you will receive updates regarding the withdrawal. Upon successful verification, the amount, with applicable deductions, will reflect in your bank account within three working days. 
  • In the case of closed-end schemes, the unit will automatically mature, eliminating all exit loads.

Final Words

One of the most striking features of mutual funds is their liquidity. All open-ended funds, whether debt or equity, can be readily withdrawn. With Motilal Oswal, investing in mutual funds is easy. Trade in your preferred mutual funds in just a few clicks and start investing. All you need is a DEMAT account. 


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