I have ₹3 lakh available to park either in Fixed Deposits or in debt funds. I do not need this money for the next three years or so. After going through your articles, I have chosen to invest ₹1 lakh each in the following growth schemes: Birla Dynamic Bond Fund Retail - Direct Plan, Tata Dynamic Bond Fund - Direct Plan, UTI Dynamic Bond Fund - Direct Plan. But I am confused whether to invest via a Systematic Investment Plan (SIP) or can safely park the lump sum amount immediately in these schemes? Please advise.
- Arnab
Systematic Investment Plan (SIP) is a preferred method to invest in equity schemes because it imparts discipline and averages the cost of purchase over a period of time. Also, regular investments can rule out the possibility of committing all the money during a market peak. However, these things don't apply to debt schemes as they are not that volatile or risky. In short, it is perfectly okay to invest a lump sum in debt schemes.
This article was originally published on December 21, 2015.
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