Ask ET Mutual Funds: Is it wise to invest a lumpsum in an overvalued market?

I want to invest Rs 20 lakh in a mutual fund. Is it the right time to invest in an overvalued market? Is it better to invest a lumpsum or through an SIP? - Subrata Sen

It is not really possible to predict the market. An overvalued market would continue to rise for a long period. Or an undervalued market would continue its slide for a long period. That is why it is not a great idea to time the market or making investments based on the prevailing market conditions or future projections.

That is why it is always better to stagger your investments in equity mutual funds. This will help you to avoid catching the market at a particular level. Staggering your investments through an SIP will help you to benefit from the volatility in the market and average your purchase cost. It will also help you to maximise returns.


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