Most of the long term investors invest in the market via SIP route i.e. Systematic investment plan, by which a part of the monthly income is taken away from the bank account automatically and is invested in pre-defined assets like Mutual fund or Gold or even Fixed deposit etc..

It is a great toll to make consistent investment but how to withdraw that money out when you need it or even when you do not need it but market is over valued.

Here are couple of scenarios when you should or consider withdrawing your money and how to do that –

Target based SIP and SWP

If you had started the SIP with specific target in mind like Buying a car or Holiday or even Kids Education etc. and you have achieved your target, then it is the time that you should consider stopping your SIP because you would have chosen the underlying asset and risk profile according to your objective and that has been met now.

The other important question is how and when to withdraw – if you are saving for a time sensitive purpose like kids education or buying a house, then you should start moving the money to more conservative assets couple of years in advance by systematic withdrawal plan (SWP) i.e. every month part of the portfolio will be sold in market and money will move to safe assets like FD or Debt funds, so that swing in the market does not effects your corpus.

Market Euphoria

If you are in time, where market is going crazy and everyone you speak-to is investing and giving stock tips, then it is the time that you should consider cashing out some gains which you believe will vanish as the market crashes.

Ideal will be to sell part of your portfolio in one or two chunks (consider tax impact!) and park the money in safe assets like FD, Debt funds and wait for market to crash to put the money back in.

Do not fall into the temptation of spending the cash away!

Asset Allocation and rebalancing (one of the most critical thing in any investment plan!)

Read why it is so important – https://financegrail.com/holy-grail-of-investing-asset-allocation/

Depending on individuals risk appetite, one needs to decide how much they want to invest in market (which fluctuates) and in fixed deposits (or similar safe options).

Assuming you have a moderate risk appetite, so you have invested 60% of the assets in Equity (or in market) and 40% in Fixed deposit, and due to market euphoria the price of your Equity portfolio has increased by 30% due to which you Asset allocation is now 66% and 34%. To ensure that your asset allocation remains right, you should consider selling some of your investment in Equities over a period of set duration like 6 months by way of SWP and investing that money in FD, till the time you reach 60/40 ratio.

Underlying Asset Issues

Assume you had invested in the diversified mutual fund i.e. which invested 50% in Big companies, 30% in Medium size companies and 20% in Small size companies but due to some reason fund manager has decided to change the allocation to 70, 20 and 10, which may lead to lesser return with lesser risk and may not fit in your desired outcome expectation. So, this will be the time when you should consider selling the investment in that Mutual fund (or similar assets) and moving the money to the right kind of the fund or Asset.

These are few of the scenarios in which you should consider selling your funds/ assets which you had accumulated with SIP, but there can be many other situations like requirement of the money, prepone or change in the goal or change in the size of the goal etc.

The key things to consider are –

1) Try using SWP to ensure you do not cash out at low price (like the SIP!) and

2) Always align your actions to your goal and asset allocation.

Hope this gives you a reference point, take sometime to look at your portfolio which you have accumulated over years of SIP investment and sell part of it, if there is a requirement before its too late!!