Mutual Fund Premature Rules: Investment in Mutual Fund Schemes has increased in recent years. It is being liked more especially among the people of Tier-2 and Tier-3 cities.
Due to the high risk involved in investing directly in the stock market, people show more confidence in investing through Mutual Funds . In such a situation, if you are planning to withdraw money from mutual funds before time or maturity, then this news is for you.
Money can be withdrawn from mutual funds before time (Withdrawal money from mutual fund before lock-in period ended) , but this does not apply to all types of mutual funds. There are also some mutual funds where you may have to pay a fine or penalty for withdrawing money from time or lock-in period.
From which mutual funds can I withdraw money?
Most mutual fund schemes are open ended. Investment can be withdrawn at any time from open ended mutual fund schemes. Withdrawals can be made in parts instead of the entire investment. On this, according to your scheme, you just have to pay the exit load, which is generally very less.
On the other hand, there are Equity Linked Savings Scheme (ELSS) mutual fund schemes. You also get tax exemption on these schemes under Section-80C of Income Tax. That’s why there is a ‘lock in period’ of three years on these schemes. In such a situation, whenever money is withdrawn from these schemes before time, then penalty has to be paid. It can be between 5 to 10 percent.
How to withdraw money from mutual fund?
There are many ways to withdraw money from mutual funds. Whenever you plan to withdraw money from an open ended mutual fund scheme, usually the minimum units that can be redeemed are reflected in your scheme document.
Investments in mutual funds can be redeemed at the Investor Service Centers of the scheme offering companies, at the offices of asset management companies, through demat accounts or through online platforms.