Lump sum investment

POSTED BY Kiran ON August 14, 2011 12:07 pm COMMENTS (6)

More than 10 lakhs Lying idle in NRE account. Started SIPs in to mutual funds in the last year.

My current assett allocation is around 20:80  with Equity: Debt.

I would like achieve the reverse of this equation as I am about 32 years of age. Is it ok to invest lumpsum amount in to Equity MF as I dont need the same for at least the next 15 years.

Will there be any massive difference in the returns obtained in the long term?

Please advise




6 replies on this article “Lump sum investment”

  1. Kiran says:

    Thanks to Dr Imran, Zionview and Ramesh.

    The funds that I hold are
    HDFC top 200
    HDFC Equity
    UTI divident yield
    Fidelty India growth
    DSPBR equity

    I am due to start one more in IDFC Premier equity from tomorrow.

    Please advice the reason behind having only 2-3 funds. What funds could be churned from my portfolio

    1. Ramesh says:

      Check out the mandate of the particular fund. and see if it fits in your portfolio well. eg. HDFC equity and HDFC top 200 have different mandates. In my opinion, only one of them can fit. HDFC top 200 caters to bse 200 plus top 200 capped companies, while hdfc equity does not have any such restriction. So either you invest in larger caps or your invest all around. So out of the two, you should pick only one.
      You have to do this analysis with every fund of yours and then manage them. If you know, why you have picked a fund, you will know when to remove it and get a substitute as required. Also, whether you require another fund (like IDFC Premier equity).


  2. Ramesh says:


    I agree with the comments of @ TheZionView
    If you want to correct the asset allocation between equity and debt, and you are not myopic (only looking for near-term loss), then it is better to do it lumpsum. There is no end to the game of following daily changes.

    Also, it is better to have 2-3 funds only rather than having 5 funds. so select them and then only invest in them without increasing your number of funds. What are your existing funds? Are they similar or dissimilar?

    If the markets go up from now, your SIPs will be buying you lesser units! Then a lumpsum now will be much better in the longer run. And vice versa. And we dont know, what is going to happen in future.


  3. Kiran says:

    Thanks for the responses.

    The debt portion is quite high as I couldn’t go a head with a business venture as planned.

    Agreed that I have to be having term insurance, medical insurance and emergency funds to be kept aside.
    I am prepared to take the losses in the short term

    I am going through SIP route in to 5 Mutual funds about 30,000 rupees/month as of now.

    Please advise

    If it is ok to spread the 10 lakhs for over a period of 12 months via SIP ( in about 5 different equity oriented MFs) or
    Just bump up the existing funds ( as of now due to market volatility)

  4. TheZionView says:


    You can do a lump sum if your not going to take it for 15 years. But before that you should make sure you are covered in all other aspects of financial life.Like

    Make sure you have 4-6 months of monthly expense as Emergency Fund.
    Adequately Insure yourself with a Term Insurance
    Adequate Medical Insurance

    Also you should be ready to take some losses in short term.Ask yourself if you invest 10 Lakh today and find that it went down to 7 lakh in a month from now.Will you be fine with it and still continue to be invested without worrying?

    If your fine with all above you can go ahead with your lumpsum invetment.

  5. Dr. Mohd Imran says:

    Dear Kiran,

    It is suprising that at the age of 32 yrs , ur equation is 20:80 in equity and debt. At younger age risk capability is more so more allocation should be done in equity. Why do u want to invest lump sum ? Do u believe market will upright straight ? Agreed that after 15 yrs it will be more profitable and market will be up. Suppose u invest lump sum right now for visionof 15 yrs, and market fall, but keeping in mind of patience of human being and u (who kept 80 percent in debt funds) ur hospital bills rise after seeing ur money falls so sharp. And if ur invest in SIP and believs in contnuing SIP whatever market so when market fall u would be somewhat happy that u r getting more units.So in my opinion invest in SIP. In equity u should keep 65 pecent, 10 percent in govt secuirities, 25 percent in Gold bonds

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.