My wife has Rs 5 lakh and wants to invest a lump sum for our daughter’s future needs which is 15 years away. Please advice a fund to invest this sum.
We feel you should consider investing regularly using the systematic investment plan (SIP) option for long-term wealth creation. When investing in lump sum; you run the risk of ill-timing your investment and catching, what could be the peak of the market and paying more for the number of mutual fund units you acquire.
However, if you invest through SIPs in a fund, you average your acquisition cost over a period of time with the possibility of adding more units. The risk when investing through SIPs is far lower compared to investing in lump sum. We suggest you park the Rs 5 lakh in a liquid fund or even in your bank account and start a SIP investment in mutual funds based on your risk tolerance, which will also decide the asset allocation (mix of equity and fixed return investment) that suits you and look for funds in the fund select feature on our website to invest in. Review the performance of the funds that you invest in once a year to assess the progress made by your investments as well as balance your portfolio to stay with the asset allocation that suits you.