Is it the right time to book profits in Parag Parikh Long Term Equity Fund?

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In this volatile market, can I withdraw money from Parag Parikh Long Term Equity Fund? Can I park the proceeds in Parag Parikh Liquid Fund to take care of your future emergencies? I want to do this because the NAV of the Parag Parikh Equity Fund, which is forever higher, will fall and entire profit would be lost if the market falls at any time. So, I want to save money by switching from an equity fund to a liquid fund. Is it a good idea?

-Arijit Pal

We always ask investors to use a goal-based strategy. If you are investing in an equity mutual funds to take care of a long-term as per investment strategy, you will have the confidence to invest/stay invested in equity mutual funds through good and bad times. Otherwise, many investors, especially new investors, tend to get nervous in a volatile market.

  • 2.92%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 4.8 YearsTime taken to double money
  • 6.69%Annualized Return for 1 year
  • <1 yearSuggested Investment Horizon
  • 6.10 YearsTime taken to double money
You have not shared whether you have made a lumpsum investment or invested via SIP, or what was the purpose behind this investment. So, we would offer a general advice.

What you are trying to do is second guessing the market or trying to predict the future course of the market. Every investor dream of selling high and buying low to maximise profits. However, it is not easy to execute, especially for a very long period. For example, you are assuming that the market is going to fall soon. Will it? Nobody can answer for sure. It may, or it may not. If you get your call right, you may be able to keep the money safer in a liquid fund. What if the market rises sharply? You will lose money.

You should keep in mind that whenever you take such a call, there is a chance of you going wrong. That is why many investment advisors ask investors to invest a small sum regularly over a long period to achieve long-term financial goals. When you invest through various phases in the markets (means ups and downs), you would be able to average your purchase cost. It will help you to maximise your profits. You can take the money out of these schemes a few years before your actual goal to make sure your money is safer in a liquid fund or bank deposit. You may also sell your investments if there is any major fundamental change to your scheme.

Taking a call on the market and taking your investment decisions based on the market conditions would make the process extremely complex for you. You should be ready to do a lot of research and devote a lot of time to execute it. Even then there is no guarantee that you would get right all the time.

Finally, take stock of your situation. Do you need the money immediately? If so, you may sell yoru investments in the equity scheme and keep it safer in a liquid scheme. Is your investment goals more than five years away? If so, continue with yoru investments or stay invested. Take the money our two or three years before the goal, and park it somewhere safe to take care of your financial goal.

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