personal-finance
In cash crunch, you can pledge your mutual fund
Sep 07, 12:09

If there is a sudden financial emergency, instead of withdrawing your mutual fund (MF) investments, you can consider taking loan against your MF investments. Both banks and non-bank financial companies offer this type of loan. The MF scheme should be among the approved schemes by your lender. Usually, you can get higher loan for the same amount of investment in a debt scheme, compared to an equity scheme because debt funds are less volatile. Rates of interest are usually 10-12 percent. Remember, if you are not able to meet the loan obligations, the lender has the right to sell your MF units to recover the dues. So, it is better to go for such loan, when you know your cash crunch is going to be temporary.

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