A fall in the market temptsseveral investors to take a blind plunge into equities. However, this is often frowned upon. Experts always advise investors to keep their sentiment and emotions aside when making any financial decision. Rather, an investor must make investment decisions basis their risk profile, financial objectives, and investment horizon. Also, make sure to build a proper asset allocation strategy to ensure that your mutual fund investments make abundant money for you.


If you have surplus cash lying around and if you wish to make a lumpsum investment in mutual funds, then the following pointers can help you do the same.

If you wish to make significant purchase in the near term

A big purchase could be anything right from purchasing a house or a luxury car, or taking your family to an exotic vacation, or paying off your loads of debt. Such scenarios require investorsto be conservative towards their funds. As you do not have much time to accumulate money, you must not take too much risk. Short-term goals are those that are less than three years. Appropriate investment options for short-term goals may include PSU bonds, short-term debt funds, liquid funds.

If your aim is to invest for medium term

Medium-term goals are usually four to seven years or even ten years apart. If you are one of those investors who are uncomfortable with market volatility, then you are better off with fixed-income securities. However, if you are ready to deal with the market volatilites to attain greater returns, then you might consider investing majority of your portfolio in equity and equity-related instruments. Ideal investment options for medium-term include Certificate of Deposit (CD), savings scheme, etc.

If you wish to invest for the long run

Long-term goals are those that are usually more than ten years away, or maybe even twenty. Common long-term financial goals include planning for your child’s higher education or their marriage, or even your retirement. As you have ample time on your plate, you can consider investing in equities. This is because the volatility associated with equity investments mellow down when invested for a prolonged duration. If you have the stomach for high volatility, you might consider allocating a part of your investments to small-cap and mid-cap funds. These funds have the potential to generate significant returns over a period of time. You might consider even international funds for your portfolio.

Investing in lump sum mutual fund must be done only after careful and judicious research and planning.You must not make a decision solely on the basis of falling markets. You can use a mutual funds lumpsum calculator to get an estimate value of your investments over a period of time. A lot of lumpsum calculators also offer the option to inflate your mutual fund investments. You must always factor in inflation to understand the true value of your investments. Happy investing!

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