Experts are also seeing a correction from the current level due to an outside risk in the market. In such a situation, the question before the investors is how to invest money in the broken market.
Continue SIP in Equity: There is a good recovery in the stock market today. Sensex has gained more than 850 points, while Nifty has also crossed 15600. By the way, this year the Sensex and Nifty have fallen around 11 per cent and 12 per cent. The outlook regarding the market is still not clear. Factors like inflation, geopolitical tension, rate hike cycle and FII selling are present in the market. Experts are also seeing a correction from the current level due to an outside risk in the market. In such a situation, the question before the investors is how to invest money in the market that has broken 11 percent to 12 percent. Is SIP a better option or is it time to invest in lump sum?
Keep doing SIP, no need to pause
AK Nigam, director of BPN Fincap, says that there has been a significant decline in the market. Many shares have become cheap. In today’s era, investing in equity through SIP is the best way. Seeing the falling market, instead of stopping or pausing the SIP, continue with it. You will get more units now than before, whereas when there is a recovery in the market, then all the units will get the benefit of growth. He says that now is the time that if there is a fall, then the amount of SIP can be increased further. It is important to understand that this is a cycle of correction, which is not going to be permanent. The long term outlook of the Indian market is better.
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Can Lump Sum in 3 Steps
AK Nigam says that if you want to invest lump sum, then you can do it in 3 or 4 steps. Investors can currently allocate 40 per cent of their total corpus in equities. At the same time, if there is stability in the market, 30 percent should be invested and the remaining 30 percent should be invested when the rally starts.
Do not block money in one go
Swastika Investmart Ltd. Head of Research Santosh Meena says that there is an outside risk in the current market. Due to which 10 percent to 15 percent correction can come in the market. In such a situation, investing through Systematic Investment Plan ie SIP is the right strategy. Those whose SIP is already running, they should continue it. But it is not the right way to trap all the money in one go. Money will also be blocked due to lump sum investment, whereas if the fall increases, then there can be loss too.
(Disclaimer: The investment views here are given by experts. These are not the personal views of The Financial Express. Markets are risky, so please consult your level before investing.)