Please help All about Profit Booking! Thanks

POSTED BY Vikas Vyas ON September 29, 2012 9:13 pm COMMENTS (7)


Hi Friends


I have been investing in MF since 2008.


My primary goal is for long term investment capital appreciation.  I have often heard about profit booking but know nothing how to go about it. What I get to know if the returns are higher than expected, one needs to book profits.


My simple query is what we do next with the \’booked\’ profits.  If it comes in my hands, it will simply go away as expenses. Basically, I just want to stay invested regularly in good funds and only withdraw when i actually need them at later stage. 


During this time period there will be several bull and bear phases.. Can I afford to remain unperturbed and allow the money to be there or I have to something smarter?  


I just want to get the basics right. I am not a person who would want to shuffle between equity and debt and again do the same from debt to equity.  Even if it means, i let go of small gains in the process.  That would be too messy, worry about time period and tax complications if withdrawn before an year etc.. but if that is the only way, i have no choice.


Ofcourse, I do periodical review of the funds i have invested to see if any of them are underperforming.  Here are the funds I have invested in.








7 replies on this article “Please help All about Profit Booking! Thanks”

  1. bharat shah says:

    Regarding balancing of assets ,one may keep two points in consideration:

    1. first use your new invest able funds while balancing ,i.e. invest in the asset class which lags as per your pre decided %age.

    2. periodic re balancing as per your plan periods, the re balancing to be carried out only if it falls out of range , say +/- 5% points of your pre decided % limit ( i.e. for equity, you kept 80% , then re balancing is to be done only it falls out of 75% to 85% range). 5% is only indicative, it depends upon your comfort level, period of re balancing etc.

    of course , these points only to supplement to previous comments

    1. Vikas Vyas says:


      Thank you

      Any thumb rule % in asset allocation? My primary goal is retirement corpus and also health issues. I live with my parents and am single. In other words, I am trying to achieve some sort of ‘financial freedom’ in the long run. I am self employed and my income is not steady, it may be very thin at times, some time i may have surplus. . So I want to channelize and build a corpus where I can neatly take X sum after 15 or 20 years.

      Also when we talk about balancing portfolio, wont external factors affect? Let us say I allocate 5% to Gold, But let us say there is a heavy crash and Gold goes to level where it is highly attractive to invest. Wont it be practical enough to invest a sizable chunk in Gold at that point of time without bothering about allocation? Just trying to understand how it works please.

      Thanks again for all your valuable inputs. It really helps


  2. Exactly. Since you dont know when to book profits is why you do an asset rebalance – either when you are off your allocation significantly or on a periodic basis. Rebalance does not necessarily mean sell equity and buy debt or vice versa. In a particular year one can even push all money into the Equity/Debt side to balance out. It appears to be a complicated process but is not and is the best known way to protect profits.

    In general planners recommend moving money into Debt instruments some 3 years prior to reaching a goal. Bear markets can sometime be protratced and last for more than 3-5 years and can thus throw goal plans out of focus for a lot of people while a periodic rebalance protects significant gains.

    1. Vikas Vyas says:


      Thank you so much.

      Now I will learn about asset allocation with the useful link provided by you.


  3. Dear Vikas, if your time frame is some where 15-20 years away you need not to book your profits to plough back again in Eq. You can never exit or enter at right time. You can only spend a good time in the markert to weed out intermediate volatility.



    1. Vikas Vyas says:

      Dear Ashal

      Thank you! This was the perfect answer I was waiting for 🙂

      Just keep investing in MFs but with a periodical review of the performance.



  4. Asset allocation is the solution to grow long term wealth. When profits grow in equity book profits and move to Debt and vice versa.

    Check this detailed treatment on asset allocation :

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