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Selling Mutual Funds vs Taking a Loan Against Them: Investor Dilemma Explained
Loan Against Mutual Funds allows investors to meet cash needs without redeeming units, preserving compounding and avoiding immediate tax liabilities.
Investors facing short-term cash needs often struggle between selling mutual fund units or opting for a loan against them. Selling triggers capital gains tax and breaks long-term compounding, while a loan against mutual funds allows continued market participation. Financial advisors note that LAMF is better suited for temporary liquidity, whereas redemption may still be appropriate for long-term cash requirements or portfolio rebalancing decisions. Apply Now