Hi, I am 40 years old (current allocation is 61% equity and 39% debt+cash in a 2.52 cr portfolio) and used to do SIPs in mutual funds until March 23, 2020 when market crashed. I used to follow someone on YouTube and he was of the opinion that Nifty will touch 6000 and it is better to wait for those levels and then continue investing in direct stocks/MFs. However, that level never came and the market rebounded and since then I've been parking funds in FDs which give around 7% returns pre tax. As on today, I realised Nifty is at all time high now. How can I invest the 70 lakhs parked in FDs in mutual funds now? Should I do lumpsum in HDFC Sensex index fund/Quant smallcap fund/Quant midcap fund since although the market is at all time high, but eventually the money will grow at 12% CAGR (in case of index fund, more in case of active funds like Quant smallcap or Quant midcap) or should I go the SIP route and invest this 70 lakhs in HDFC Sensex index fund/Quant smallcap fund/Quant midcap fund over a period of 3-5 years in equal SIP instalments?
Ans: It sounds like you've had quite the journey navigating the market's ups and downs. Given your current situation and the substantial amount parked in FDs, it's understandable to seek guidance on how to deploy those funds effectively.
Since the market is currently at an all-time high, lump-sum investing might seem daunting. However, attempting to time the market based on past predictions can be risky and challenging. Instead, consider a systematic approach to gradually deploy your funds over time.
One option is to allocate the 70 lakhs into mutual funds using a systematic transfer plan (STP) or a phased approach through SIPs. This approach allows you to spread your investments over a period of time, reducing the impact of short-term market fluctuations.
You mentioned considering HDFC Sensex index fund, Quant smallcap fund, and Quant midcap fund. These are indeed viable options, each with its own risk-return profile. While index funds offer broad market exposure with lower expenses, actively managed funds like Quant smallcap and Quant midcap have the potential for higher returns but also come with increased risk.
Ultimately, the choice between lump-sum investing and SIPs depends on your risk tolerance, investment goals, and time horizon. Consulting with a Certified Financial Planner can help you devise a strategy tailored to your specific circumstances, ensuring your investments align with your objectives and provide a path to long-term growth and financial security.