Getting to Know Redemption in the Investment World
In the investment world, of course there are many investment terms that we still don’t understand and have never heard of, such as redemption. Have you ever heard this term before?
We actually hear this term more often when you are conducting financial transactions in supermarkets or shopping centers when using a credit card at the cashier.
Surely you are familiar with this when making payments with a credit card . Because previously the cashier where you shopped would definitely ask you about this “do you want to use the redeem points you have or not?”
Making payments by credit card is one example of when the term “ redemption ” is used. Actually, in everyday life we often use this term without realizing it, but we don’t really understand what it means.
Table of Contents
What is Redemption?
The Meaning of Redemption in the Investment World
When is the Best Time to Make a Disbursement?
1. Really Need Money
2. Mutual Fund Investment Decreased
3. Rebalancing
How Many Redemptions Are Made?
What is Redemption?
Redemption can be said as redemption, for example when you shop using a credit card or member card at a shopping center. You will get points from your shopping results there, where we can call these points Redeem Points.
Redeem points can be exchanged later at a discounted price, or directly exchanged for a product if you have enough points.
To find out, the number of redeem points you have, you can usually check the amount through the application or website of the merchant in question. This is the easiest explanation even for ordinary people to understand about what redemption is.
The Meaning of Redemption in the Investment World
The redemption explanation that has been explained in the previous point, of course, has a difference when we compare it with the redemption that we are familiar with in the investment world.
In the investment world, we can find redemption in mutual fund transactions. Redemptions is redemption or redemption of mutual fund participation units. Maybe among investors this term is very familiar to them, but among ordinary people they are more familiar with the term disbursement or withdrawal of funds.
Usually, many novice investors choose mutual funds because they offer low investment risk and affordable investment costs.
Even so, each type of mutual fund currently being offered has its own characteristics for investors. For investors who want to save their funds in mutual funds for long-term financial goals, stock mutual funds are the best option.
Meanwhile, for short and medium term financial goals. Beginner investors are advised to place their funds in the money market and fixed income mutual funds.
Thus, the investment needs placed in each type of mutual fund can be adjusted to the financial goals of each investor. This needs to be done so that mutual fund investments can generate maximum profits according to financial goals.
When is the Best Time to Make a Disbursement?
Even though mutual fund investment has the advantage of withdrawing funds which can be done anytime and anywhere, for example through the Magic application. However, the mistake of beginner investors in general is withdrawing their investment funds at the wrong moment. So, you can’t experience and maximize the benefits of investing in mutual funds because it’s too fast to withdraw the funds you have.
To maximize your mutual fund investment, you need to know when is the best time to withdraw your mutual funds, are as fellow:
1. Really Need Money
As is known, expenses can come from anywhere. Maybe for some people who have sufficient cash, of course you don’t need to withdraw funds from your mutual fund investment.
However, it is different if you have no cash at all. Where, you can withdraw funds in your mutual fund investments quickly and easily with the help of online investment applications such as Ajaib.
The mutual fund disbursement process at Ajaib can take up to 7 working days. This is because there are various policies and processes that need to be carried out by the Investment Manager (MI).
2. Mutual Fund Investment Decreased
The second moment that can help you in making the decision to sell a mutual fund is when the price continues to decrease. You can sell the mutual funds and transfer the funds to other types of investment instruments that are more profitable, such as stocks or other types of mutual funds.
However, before selling mutual funds, you should first make observations regarding the factors that make the value of your mutual funds continue to decrease.
3. Rebalancing
If the performance of the mutual funds owned is not in accordance with expectations or has met expectations. You can sell the mutual funds you have to transfer your assets to other types of investment instruments based on the profit opportunities you want to get.
How Many Redemptions Are Made?
If your reason for redemption is for consumptive purposes, such as buying a house or personal vehicle, all you need to do is pay attention to how much the tax and redemption fees will reduce the value of the shares.
However, if your goal is to rebalance assets , apart from paying attention to how much taxes and transaction fees are, you also have to look at the proportion of your assets.
If you start investing with the proportion of 80% stocks and 20% bonds. Then the proportion of your assets changes to 90% stocks and 10% bonds, then you have to sell the 10% excess shares to then use them back into your bonds account.
That is the explanation of redemption, which turns out to be a very familiar term for an investor. However, it is rarely known by ordinary people out there and are more familiar with the term withdrawal or disbursement of funds.