Should I invest in mutual funds at the current market level
Good day Sir, I would like to invest some amount in mutual fund (Lump sum), Sir is it the right time for lump sum investment or need to wait for more correction. I am planning to invest around 1 Cr. Waiting for your valuble advise. Thank you
Dec 6, 2018 by James Araham, Delhi | Mutual Fund
Good day James!
Yes, we think, this is the right time to invest as the markets have corrected almost by 10% from the last peak, and therefore, offers a good entry point for long term mutual fund investors.
Having said the above, I am assuming you are talking about investing in equity mutual funds (as you are referring to the market) and also that you have a long term investment view (minimum 5 years or so). If you see the historical performance track record, you will notice that equity mutual funds/ equities have always beaten rest of the asset classes if one has remain invested up-till the desired time horizon (in this case 5 years).
I am also assuming that you are ready to take moderately high to high risk as investing in equity mutual funds. We suggest that you select a category of mutual fund basis your risk taking ability. For example - if you can take moderately high risk, large cap funds and large & mid cap equity funds should be your preferred choice. In case of high risk taking ability, you can select good mid cap funds or multi cap funds for your long term investments.
However, if you think, the markets may correct (which nobody can predict) further, our suggestion would be to park your lump sum investments in liquid funds and transfer systematically to the chosen equity mutual funds. This strategy is called STP - Systematic Investment Plan. To know more about what is STP, you can read our blog on the said topic https://www.meetplutus.com/mutual-funds/How-Mutual-Fund-Systematic-Transfer-Plans-or-STPs-work. In short, STP helps you ride the market volatility as you benefit from rupee cost averaging of your units accumulated in equity mutual funds while earning more than savings bank interest on the amount parked in liquid funds.
Let us now see how these equity funds have performed historically -
Large cap funds - https://bit.ly/2EeI15E
Large & mid cap Funds - https://bit.ly/2E404dB
Mid cap funds - https://bit.ly/2G2BbBP
Multi cap funds - https://bit.ly/2QAk0f3
Hope the above is helpful to you.
Please do connect to us at 98118-88058 or write to us at email@example.com in case you want to invest with us online or off-line.
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