Currently, there are various financial products in the markets to try to properly monetize your money for investment, one of the most common and increasingly used in Spain, since a few years are the famous investment funds with their different characteristics, categories, returns and risks to be assumed.
Once you have made the important decision to be a participant in an investment fund and after a more or less prolonged period of time, you can give the happy case of having little by little good latent capital gains (accumulated profits). The markets after a few days or weeks can correct prices and therefore the liquidation value of the fund may come down, it will be at this time when you may have the logical doubt about: Is it convenient to take the capital gains from an investment fund?
As a good continuous formation of our many readers and followers of this section, we will see below the different aspects and circumstances that can help you make the decision to sell shares to “take the capital gains” or, continue to maintain the fund waiting for an even higher return on investment.
Each strategy is different and each investor also: Before investing in funds you must have established a personal strategy on levels of risk assumed (according to investor profile) or profitability to be achieved and consult the manager’s estimates on what period of time or investment horizon is recommended for this specific type of investment fund. If you are close to getting it, it may be interesting to sell the shares.
In cases of funds in fixed income: Normally when investing in financial assets such as bonds, bonds, public debt … etc. Its daily variations in the liquidation value are small, so they do not usually immediately put at risk the possible capital gains achieved over a long time of said investment.
In cases of mixed-income funds: This type of funds have a more or less high percentage of investment in equity assets, which means that the investor assumes a greater financial risk. To achieve your profitability objectives, you should observe today the historical evolution of the fund, its percentage in equities … 20%, 30%, 40% … etc., and thus be able to assess carefully if you are interested in withdrawing the capital gains obtained.
In cases of funds in equities: Their greater volatility and possible wide variation of prices in their assets (investment of greater risk) if they can endanger the accumulated capital gains. Once the profitability objectives initially foreseen by the participant have been met, it may be a correct strategy to withdraw “the money earned” to protect benefits.
As you already know, each investment fund will suffer variations in its liquidation value depending on the increases or decreases in the prices of shares of the Exchange in which the manager has invested the capital, depending on whether it is mixed funds or funds. variable income (not fixed income).
Before proceeding to withdraw the accumulated capital gains in your investment fund, it will be very convenient that you also make a serious and sensible approach to the use or destiny of that money. If it is only to have it “stopped” in the bank, you will soon verify that it is losing its purchasing power due to inflation. If, on the other hand, you reinvest it in another investment fund with lower risk, the ideal will be not to withdraw the profits and before transferring the fund without having to pay taxes to the treasury until its final sale.
Summing up if you have good earnings accumulated in your fund, before making definitive operations of partial or total sale of shares motivated by rumors, hoaxes, intentional advertising, emotional impulses or simple desire to withdraw benefits, you must previously reflect in a disciplined and consistent manner, to So find your own answer to our initial question: “Is it convenient to take the capital gains from an investment fund?”