Which fund should I invest in lump sum

Considering your risk profile you should invest in balanced funds and large cap funds. For investing in large cap funds you can select from SBI Bluechip Fund, Birla Sun Life Frontline Equity Fund or DSP BlackRock Focus 25 Fund. Among balanced funds, you can choose from ICICI Prudential Balanced Fund, HDFC Balanced Fund, L&T India Prudence Fund and DSP BlackRock Balanced Fund.

The investment horizon for investing in large cap or balanced funds must be 5 years and the return expectation should be around 12%. Expecting 18-20% return could be very high and it totally depends on how the markets will be after 5 years or so from the date of your investment.

There are no thumb rule as to how much one should invest in each category of funds based on one’s risk profile. Having said that, you should first check your tax saving requirements and invest in ELSS funds to the extent you need to save (maximum Rs 150,000 can be saved under Section 80C of the Income Tax Act 1961). Once you are done with your ELSS investments, you can consider investing in other category of funds – in your case, it is large cap and balanced funds.

With regards to if this is the right time to invest in lump sum, please not that there is no clear cut answer to this. However, we can suggest that if you have investible surpluses in your hand now, you can invest in lump sum provided you have an investment horizon of at least 5 years. As markets are taking new highs almost every week, therefore, waiting for a correction may not give you an opportunity to invest at all!

Hope the above helps! Thanks for writing to Advisorkhoj!