Ways To Redeem Mutual Funds

Written by admin on May 1st, 2011

There’s no doubt about it – mutual funds have emerged as one of the most powerful investment tools. Even the process of investing in these funds is very easy and hassle-free, as there is no need to do extensive research. However, there are a couple of things that you must be well aware of. For example, many people just don’t have any idea on how to redeem their investment when their funds mature and they decide to sell their shares. You will find the following information very helpful in this regard.  

Review The Statement Of Your Investment
The first thing that you have to do is to check the statement of your mutual funds investment. Look at the bottom of the page – you will find a transaction slip attached there. You have to fill this transaction slip, but there are certain instructions that you have to follow in this regard. You can find these instructions at the back of the statement. The mailing address of the company you purchased the mutual fund is also printed on the back of the statement. All you have to do is just to fill the transaction slip and then mail the same to the company at the address given.

Contact The Broker
If you don’t like the idea of sending the slip through snail mail, you can alternatively contact the broker who had helped you purchase the mutual funds initially. It can either be an online broker or a physical broker. In either case, the process of redemption of shares is not going to be very difficult. For example, if the broker had helped you set up a money market account, it is very much likely that the funds caused by the redemption of shares will get deposited directly into that account. Once the fund is deposited there, it is all yours – you can then reinvest the same or withdraw it for your own use.

Wait For The Maturity Date
The third alternative for redemption of shares is to wait until your mutual funds reach the maturity date. In most cases, the brokers provide you the option for automatic redemption once the funds reach their maturity. This is obviously the easiest process, as it does not require you to do anything from your side. Once your funds are mature, the redemption will happen automatically and the amount will directly be credited to your money market account that was set up with the help of the broker originally. Moreover, some brokers may also provide you an option to reinvest the redemption amount in other mutual funds or stock automatically.

However, when it comes to redemption of mutual funds, there are several things that you need to take into your careful consideration. For example, some companies may also charge you a penalty if you are redeeming the funds before its maturity date. So, it is important for you to read the terms and conditions thoroughly and make sure there’s no penalty of early redemption.

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