Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Partial Redemption

What it is:

A partial redemption occurs when an investor withdraws some of a security's value.
 

How it works (Example):

Let's say John Doe owns $200,000 of Treasury securities. He decides he's having a mid-life crisis and wants to buy a red sportscar. To get the money, he partially redeems his Treasury investment by withdrawing $75,000 of Treasury notes in his portfolio account.
 

Why it Matters:

A partial redemption is a partial liquidation of an account. They may occur in order to lock in profits, pay liabilities, or divert assets to another investment.