How to invest in this red-hot market

Mr. Market and its many moods

Equity markets are known to be incredibly moody. That’s why investing all the money in one go (lumpsum investing) isn’t the best idea.

SIP isn’t a great idea either

If you did an SIP in an equity fund, the rest of your money would gather dust in your savings account. So, how do you counter this?

A better solution

Step one: you can park the cash in either a liquid fund or an ultra-short duration fund.

The secret ingredient: STPs

Step two: Use STP or systematic transfer plan. It will withdraw sums from the liquid/ultra-short duration fund and invest it in the equity fund in instalments.

Your money will grow faster

Here’s how the returns for an SIP and an STP compare in such a case.

Thing to remember

The only condition is that the debt fund and equity fund have to belong to the same fund house.

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