You can initiate rebalancing of your goals in just a few clicks.
When you click 'Rebalance' (in the left menu of your Goalwise account) > 'Rebalance Portfolio' - you will be shown the number of goals that require rebalancing. Please note that we only show a goal for portfolio rebalancing if there is some exit load free amount that can be rebalanced.
On clicking 'Start Rebalancing', the screen will take you to some important information about rebalancing. We urge you to read through it patiently as it will clear most of the doubts you may have regarding the process.
On clicking 'Continue to Rebalance', you will be taken to the first goal that needs rebalancing. Here it will show you why the goal needs rebalancing. There can be 2 reasons why your goal needs it.
- Your asset allocation is different from your goal plan and needs rebalancing. This means that the equity:debt ratio is not matching the ideal ratio given your chosen risk level and time horizon of the goal. Either you have more debt than ideal in your goal or more equity than recommended in the goal plan (based on your inputs).
- Your current funds are not the same as our recommended funds. This means that there is some exit load free amount invested in Mutual Fund schemes that are not currently recommended by Goalwise. This can be moved to the current recommended funds.
On clicking 'Next', you will be shown exactly how much will be redeemed/switched out from each fund and how much will be invested in the new funds.
On this page you will also be given 2 options to rebalance based on exit load and equity tax.
- Rebalance exit load amount: This will rebalance the amount that is exit load free. This amount could have some taxable gains. For example, let's say you have Rs 1,10,000 worth of gains in an equity Mutual Fund, which is exit load free. This will be redeemed/switched out and invested in the recommended funds. This will ensure there is no applicable exit load but these gains will still be taxable as they are over Rs 1 lakh.
- Rebalance equity tax free amount (Recommended): This will rebalance the amount in equity Mutual Funds that will also not incur any long term capital gains tax in addition to being exit load free. So if you have gains more than Rs 1 lakh, it will only rebalance the amount less than that to avoid taxes. This is only applicable to equity funds as debt funds will always have tax (either long term or short term).
Both these options will ensure that debt funds are only recommended for rebalancing after they have crossed the Short Term Capital Gains (STCG) tax stage.
On clicking 'Review Rebalance', you will be shown the total redemption/switch out amount and total re-investment amount with the likely date ranges for both respectively.
The redeemed amount will reach your bank account in 3-5 business days and thereafter the re-investment will be done via the auto-debit that you have registered with us.
So although the entire rebalancing may take about 10-15 business days (depending on your auto-debit limit), you won’t have to do a thing after you initiate the rebalance process.
Also, where possible we will use a switch transaction to combine redemption and re-investment between funds of the same Mutual Fund company (e.g. between funds of Birla Mutual Fund company). In case of switches, the switch out from the old funds and switch in to the new funds will happen without it reaching your bank account. To read more about switch transactions click here.
Nothing needs to be done at your end after this.