How to invest my lump sum amount

There is bit of confusion in your query. Lump sum and STP are different ways of investing in mutual funds and SWP is all about withdrawing a fixed amount regularly (say monthly) from mutual funds.

If you want to invest your FD maturity amount then you can opt for lump sum or STP route but SWP will not come into this. We assume, your query is about investing the FD maturity amount in mutual funds through STP route to gain from rupee cost averaging!

If our assumption is correct, then you can invest in a liquid fund and do weekly or monthly STP over 12 months period, to an equity or balanced fund of the same AMC. If you do this, chances are your average unit acquisition will be much lesser than had you invested in one go in lump sum mode.

However, if you looking to withdraw immediately from your investments through SWP route, then you can invest a part of the corpus in liquid fund and rest in equity or balanced fund. Start SWP withdrawal from the liquid fund during the initial months (say 12 months) then start SWP from equity or balanced fund (provided your investments have appreciated at least to the extent of the amount that you want to withdraw in the second year).

This will ensure that your equity or balanced funds gets time to grow and also that SWP withdrawals from balanced and equity fund after one year will be tax free under long term capital gains tax.

However, if both our assumptions are wrong, then do write back to us with your actual requirement and we will definitely help you out on this.

Thanks for writing to us.