Don’t redeem, take a loan against mutual funds
When we prematurely cash out our funds, we interrupt the magic of compounding—the secret sauce behind investment growth. Compounding is what makes your money work harder for you over time.
We have all been there—in dire need of money suddenly and contemplating the redemption of our mutual fund units. It seems like a convenient choice compared to other investments like fixed deposits, provident funds, or even investment-linked life insurance. But, there are pitfalls to redeeming your mutual funds prematurely. In fact, there’s a lesser-known alternative that allows you to access funds without sacrificing the growth potential of your investments—lien your mutual fund units to generate a line of credit known as a ‘Loan against Mutual Funds’ (LAMF).