Pulling your money out of an investment shouldn’t be done without a lot of thought. When you do it, you lose all chances of earning from that investment, and there is no guarantee that you’ll be able to find an alternative with the same or better performance.
However, there are 3 instances when pulling your money out of an investment may be the right thing to do. Don’t forget that doing this will affect your overall investing strategy, including your returns and allocation of assets.
#1: You’ve reached your goal
What if you’ve gotten the amount you were investing for? Congratulations on your good decision-making and discipline in investing.
In this situation, the investment has fulfilled its purpose and raised the money you needed by the right time. You can pat yourself on the back for choosing the right product to invest in, and for sticking it out through all the temptations of shopping and other unnecessary expenses.
Don’t forget to keep going with your other investments so you can reach success with your other goals.
#2: Your situation or goal changed
What if your situation or goal isn’t the same as when you started? Evaluate the effect of the change, then see if the investment can still work for you.
If your situation has gotten difficult financially, you may have to change your strategy. That might mean you’ll need to pull your money out of your current investment and switch to a product that matches a less-aggressive risk profile.
The same may also be true if your financial goal has gotten smaller than before, because you’ll need to face less risk to reach it.
If you’re in a better position money-wise, you may be willing to take on more risk in exchange for the chance of higher returns. That also involves the possibility of switching to a different investment.
An increase in your financial goal can also lead you to transfer your money to a product with more potential, if you see that your current investment won’t be giving you enough profit. Remember, though, that this can lead you to assume more risk than before.
#3: The investment isn’t giving enough returns
What if the performance isn’t as high as you expected? Understand the situation first, then make a careful decision on the right step to take.
If your investment is not just experiencing the ups and downs of a typical market cycle, something may be causing a big negative impact. If so, stay calm and find out what’s going on.
What’s behind the lower performance? Is it a temporary thing or will it probably last for years? Is it likely to keep you from reaching your goal? If you find that your investment might not be successful because of what happened, then transferring your money to a different product is a valid option.
This is a decision that should be made as rationally as possible, after a lot of research and consideration. Remember also that future returns are never a sure thing, no matter how good the past performance was.
