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I'm a new investor having a portfolio with five per cent of my money in equity and 95 per cent in debt. I want to shift an additional 15 per cent from debt to equity. Should I shift in lump sum, given my investment horizon of seven years?
- Kishan Tantiya
No, you should not do it in lump sum. In fact, one should never commit to equity investing in a lump sum but rather spread it over a number of months. That's because one never knows when one ends up catching the market at a high and if there is a sharp correction right after making the investment, it could be very painful and in some cases might just scare away the investor for the rest of his life from equity investing, which will be far more detrimental. More so, in the case of a conservative investor or a new investor like you, who is not used to the ups and downs of the equity market.
So I would suggest you spread this additional 15 per cent allocation that you are looking to switch from debt to equity over at least the next 10-12 months and that should be good enough.
This article was originally published on June 08, 2021.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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