Mutual Funds Tips: If you have money deposited in mutual funds, then it can be very useful in times of need. Know whether it is right to withdraw money from mutual funds in an emergency or take a loan against it?

Emergency never comes in life with any prior notice. And when it comes, the first thing people do is to see where their money is deposited. In today's time, most people invest money in mutual funds. If you have also deposited money in mutual funds, then you have two options in an emergency, whether you withdraw the money deposited in mutual funds or take a loan against it.

Being hasty at such a time can be a loss-making deal. Therefore, it is important that you understand the difference between these two options. Which option is right according to your need. Let us tell you which of these two options can be right for you.

Withdrawing money or taking a loan, which option is right?

If you need cash immediately, then in such a case withdrawing money from mutual funds is an easy and straightforward way. Especially if you have invested in such mutual funds from which money can be withdrawn anytime. Like liquid funds or funds that do not have a lock-in period. Then you can get money within 24 hours. But keep in mind that when your investment breaks, it affects its future returns.

At the same time, you also have the option of taking a loan against the mutual fund. In this, your fund remains mortgaged. But the investment continues and you can repay the loan slowly by paying interest. If the need is for a short time and you can arrange money slowly. Then taking a loan will be fine. But if the situation is very serious and your fund has made good profit. Then withdrawing money can be more appropriate.

Why can a loan against mutual funds be a better option?

In LAMF i.e. Loan Against Mutual Funds, you take a loan by mortgaging your mutual fund units. The advantage of this is that your investment remains intact and you keep getting returns on it. This means that you can arrange money at the time of need without breaking the fund.

The interest rates of the loan against mutual fund are usually much lower than the personal loan. Because it is a secured loan. No income proof is required for this and the process is also quick. If you need money for a short time, this is a good option.