Additional purchase

[smrtnvstr]

what is the best way to make additional purchase in the fund....

if you have got some spare cash....would it be better to just invest it lumpsum (say when market is slightly lower than what it has been for couple of months) or break it down and invest on monthly basis (like SIP)

also what should be the ideal value of such SIP (in percentage of amount)

cheers..

 

[yodlee99]

I would say, always go with SIP across the various funds in your existing portfolio in the same fraction as it is now. I am assuming that your existing portfolio is well-thought out one. The only question is how long do you want to stretch this lumpsum amount.. it depends on the amount that you have & I don't have an answer for that.
I got this question earlier from a businessman who have a SIP based investment portfolio in place and suddenly see an inflow.

 

[lonsharim]

I agree with yodlee99, SIP is better than lump-sum investment.

The reasoning is straightforward. With lump-sum an element of timing is required. If the market goes downwards after your lock stock and barrel investment then you are in trouble. It will take a long time for the fund to turn profitable. The opposite can also happen. I invested lump-sum in Feb-March 2009 in ELSS funds. Bad tax planning, didn't invest until I was forced to, but I was extremely lucky that I got the lowest NAV values in the last 3-4 years to invest). Although I was lucky, I also understood that it was time to enforce discipline in my investment patterns. I have since always invested through SIP.

With SIP you are spreading the risk. If the market falls or corrects then your cost averages out. Even if the market is on the rise, you have been picking up monthly on lower valuations all along.

 

[vishal412]

SIPs is the way to go for additional purchase, even for new purchase also i will prefer SIP, my choice is simple, market is volatile these days and right way to go for investment is through SIPs.

 

[smrtnvstr]

my SIP portfolio looks like this, comments are welcome
Birla SL Frontline Equity -A (G) 20%
DSP-BR Top 100 Equity - RP (G) 20%
HDFC Top 200 Fund (G) 20%

ICICI Pru Discovery Fund (G) 15%
Reliance Growth Fund - RP (G) 15%

Reliance Diver. Power - RP (G) 10%

 

[smrtnvstr]

totally understand SIP is the way to go

thing which I am trying to figure out is what should be the value of that SIP in percentage of the amount..

because depending on the investor, amount what is lumpsum for some could be monthly SIP for others and vice versa...

lets say I want to do additional purchase for Rs10,000/- I can invest it in say monthly SIPs of Rs2000/- each
Now somebody has Rs100,000/- for additional purchase, what should be his SIP? can't be Rs2000/-

so there has to be some kind of percentage.....what say

 

[yodlee99]

I like your portfolio...its very good.
The point I was trying to make earlier was this: suppose you have 10,000Rs lumpsum and you want to invest via SIP. Add this to the existing 6 funds in the portfolio (in the same % as it is now) and spread it over say, 10 months * 1000Rs each month.
If you have 100,000 Rs, you can add to the SIP amount every month in the same 6 funds over say, 100 weeks * 1000 Rs each week. Even better, if you can invest the 1lac in short-term liquid funds and do weekly STP into the equity funds of the same fund house.
Is this helpful ?

 

[smrtnvstr]

thanks yodlee99 I like the idea of liquid fund.

cheers..