When to pull out your investment

Investing can be tricky and knowing when to withdraw from an investment is no exception. There are times when the risks outweigh the benefits, and you should cut your losses. However, there are also times when there is still something to be gained from the investment. It’s tricky to figure out when it’s one or the other. So, how do you know when it’s time to pull out?

What does it mean to pull out of an investment?

Pulling out of an investment means selling your shares or redeeming your investment before its maturity date. It’s important to remember that investments can be volatile, so the value can go up and down. When you pull out of an investment, you may not get back the same amount that you originally invested.

When to pull out of an investment

The answer to this question depends on your individual circumstances. You need to take into account the potential return you can get on the investment, how long you have been invested, and how much risk you are comfortable with. Here are some of the most common reasons people pull out of an investment.

• The investment is not reaching your goals – If you are no longer happy with the potential returns you can get, it may be time to sell. Or, if you find that the investment’s risks have changed to more than what you are comfortable with, it’s time to let it go.
• The investment is too risky – The investment is not stable, and if it becomes too erratic for your liking, you might want to consider pulling out of your investment so you can reinvest in a less risky product.
• You've reached your goals – Not all reasons for pulling out of an investment are negative. Some people pull out of an investment because they have already received the gains they want from it.
• Your situation has changed – You may have invested money with the goal of saving up for a potential business. Let’s say you planned on using the money earned from the investment to pay for the construction of a restaurant. You initially had 6 months to save for the costs. Unfortunately, your contractor’s timeline has changed, and you need to pay for the construction earlier than anticipated. In times like this, it may be necessary for you to pull out of your investment.

How do I pull out of an investment?

When it comes time to sell your investment, you need to contact your broker or head to your bank’s online investment platform. This process is relatively simple, but there are a few things you need to keep in mind.

• Always have a plan – Before you pull out of an investment, make sure you have a solid plan in place. Know how much money you need and when you need it. You likely made the investment with a strategy in mind. It’s understandable for circumstances to change, so the timeline you initially set may not be applicable to your current situation. If that’s the case, adjust your strategy so you can still get the gains you wanted. One way you can do this is by looking at the current market trends. This helps you figure out how much you will make from it so it is still in line with your investment goals.
• Sell high, buy low – When you pull out of an investment, you want to aim to sell your investment for more than you purchased it for. This may not always be possible, however, so you should always be prepared to cut your losses
• Be prepared to pay fees – Investments, such as Unit Investment Trust Funds (UITFs) and mutual funds, require you to pay a small fee if you pull your investment out before its minimum holding period. Review the terms of your investment carefully so you can weigh whether it is better to keep your investment as-is or if taking it out and paying the fee is the wiser financial decision in the long run.

When it comes to investing, there are a lot of factors to consider. Withdrawing your money from an investment is a big decision that should not be made lightly. Be sure to carefully weigh the pros and cons before making a final choice.

If you want to start making better investments for your tomorrow, go to FirstMetroSec or check out our Metrobank investment products.