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Investing at record-high stock market levels poses a significant challenge, especially with Nifty nearing 20,000 and mid-cap and small-cap stocks already at very high levels. Many investors are uncertain about how to invest lump sum amounts in such conditions. Investors are particularly caught in a dilemma on whether it is better to hold cash with markets at all time highs and invest when they correct.
Wealth managers acknowledge that certain market segments appear stretched but advise against avoiding the market entirely. Instead, they recommend investing in simple products and diversifying investments across equities, fixed deposits, and gold. ET spoke to some wealth managers on what’s the best route to investing an amount of Rs 20 lakh in the markets in the current conditions.
For moderately conservative investors, a balanced approach with a 50% allocation to equities and a 50% allocation to gold and fixed income is prudent, say wealth managers. Within equities, they suggest index funds or flexi-cap funds for large-cap exposure. Given the recent spikes in mid-cap stocks and small-cap stocks, it’s advisable to stagger investments in these schemes over the next year and also avoid investing lump sums, they say.
For more conservative investors, limiting equity exposure to a maximum of 30% or opting for asset allocator products like balanced advantage funds is a safer strategy, the ET report said. Allocate approximately 50% to fixed income and 20% to gold in the face of challenging equity market conditions, wealth managers told the financial daily.
For example, a moderately conservative investor can look to invest around Rs 8 lakh in fixed deposits out of Rs 20 lakh and a conservative investor can put Rs 10 lakh in fixed deposits. Similarly while a conservative investor can allocate Rs 6 lakh in equity instruments, a moderately conservative investor can put Rs 10 lakh in equity products.
Wealth managers acknowledge that certain market segments appear stretched but advise against avoiding the market entirely. Instead, they recommend investing in simple products and diversifying investments across equities, fixed deposits, and gold. ET spoke to some wealth managers on what’s the best route to investing an amount of Rs 20 lakh in the markets in the current conditions.
For moderately conservative investors, a balanced approach with a 50% allocation to equities and a 50% allocation to gold and fixed income is prudent, say wealth managers. Within equities, they suggest index funds or flexi-cap funds for large-cap exposure. Given the recent spikes in mid-cap stocks and small-cap stocks, it’s advisable to stagger investments in these schemes over the next year and also avoid investing lump sums, they say.
For more conservative investors, limiting equity exposure to a maximum of 30% or opting for asset allocator products like balanced advantage funds is a safer strategy, the ET report said. Allocate approximately 50% to fixed income and 20% to gold in the face of challenging equity market conditions, wealth managers told the financial daily.
For example, a moderately conservative investor can look to invest around Rs 8 lakh in fixed deposits out of Rs 20 lakh and a conservative investor can put Rs 10 lakh in fixed deposits. Similarly while a conservative investor can allocate Rs 6 lakh in equity instruments, a moderately conservative investor can put Rs 10 lakh in equity products.
Where to invest Rs 20 lakh?
The recommended funds listed above by ET are chosen based on their one-year performance.
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