Which mutual fund do I redeem considering tax and exit load?

I have an investment in two similar performing mutual fund schemes and want to make a redemption for booking profit. Which among the two would you suggest-the one with no exit load but I will have to pay capital gains tax there or the other one, which has no gains, but I will have to bear an exit load of one per cent.
- Arvind Kumar Aggarwal

It is pure arithmetic. If you redeem an equity fund within one year, 15 per cent of the capital gains are taxed. And if you redeem an equity fund after one year, only 10 per cent of the gains are liable to tax. Also, long-term capital gains of up to Rs 1 lakh on equity are exempt in a financial year. On the other hand, exit load applies to the whole value. So just calculate both and choose the more beneficial one.

But if you are redeeming it simply because you want to book profit or trying to time the market, don't do it. Many people think they have to book profit because their investment has gone up. And after booking profit, they usually wait for a market correction to re-invest. But when the big correction happens, they get scared and start thinking that it may go down further. And while they are anticipating and being fearful, the market often rises unexpectedly by, say, 10-15 per cent. Then they regret missing the bus. That is the problem of trying to time the market.

So if you are trying to time the market by doing this exercise, don't do it. If you need the money, which is a good enough reason to redeem, just do the mathematics and be guided by it.