Edit: This question is about investing in mutual funds in India by a resident of India.

I have been working for the past 7 years. I have most of my savings in fixed deposits (60%) and stocks (40%).

My biggest regret has been not investing in mutual funds. With my approach with stocks, I am not able to earn money in 7 years. I now want to invest in mutual funds. What would be the best approach?

I can do a lump sum, the risk of which is that the market may go down in the upcoming months. Or I can do a month by month SIP where the risk is that the market goes up and my savings remain in the bank. How can I balance these two risks?

  • 1
    You have 40% of your savings into stocks, and have been investing in stocks for seven years, yet have not earned any money? Since mid-2012, despite the dip in late 2018, the DJIA (which I will use here as a proxy for stocks globally, since it was easy for me to get a hold of a chart, global average tends to track the US stock market pretty well, and you don't state a location) has more than doubled. How is that even possible?
    – user
    Commented May 25, 2019 at 15:10
  • My portfolio was a mix of large/mid/small cap. There have been some risky stocks which is now 1/10 of the price i bought. Also, i earned dividends. But losses in 2-3 stocks compensated my gain for most of the stocks. I hope you understand this situation. That's the reason i want to move towards MF
    – Nicky
    Commented May 25, 2019 at 16:03
  • i dint mentioned location as i was not asking for stock/mf recommendation but for the optimal approach. However, if it helps, location is India.
    – Nicky
    Commented May 25, 2019 at 16:05
  • It appears that you are referring to a Systematic Investment Plan (SIP), rather than the common noun sip, so I've edited accordingly. Capitalizing acronyms is important, especially if their lower case version is already an English word. Commented Jun 2, 2019 at 16:48
  • My biggest regret has been not investing in XXXXX . NO, mutual fund itself is NOT ALL SAFE. A high risk mutual fund will wiped out your investment as easy as holding a stock. It can be even worst : a bad bucket of mutual fund will siphon your investment even if the performance is flat. In addition, most country mutual fund portfolio always show misleading "best buy low" performance that is impossible to meet by the buyer.
    – mootmoot
    Commented Jun 3, 2019 at 7:47

3 Answers 3


How can I balance these two risks?

Risk is a tradeoff. A Systematic Investment Plan (SIP) reduces risk but also reduces expected return. Since the market moves up more often than it moves down, statistically you're more likely to be better off investing the lump sum and letting it grow over time.

Being better off investing regular amounts over time when you have a lump sum ready to invest would be a result of luck, not skill (unless you know something that the market doesn't already know).


What you have learned is that in seven years your ability to pick stocks hasn't been very successful compared to the average market. That also means that your ability to time the market isn't much better.

In the past the advice would be to slowly change the makeup of your portfolio, but the advice lately is to move the funds from investment X to investment Y.

You need to decide where you want your investment to be when the transformation is complete, and then move quickly in that direction. You need to be aware of any limitations that your current investments have. You will want to consider any fees or taxes related to these transactions, and see if there are ways to complete the transactions while being cost efficient.

Note that a mutual fund can be invested in things besides stocks.


D Stanley is right that statistically it is better to invest lump sum now than invest your money over time. You however also need to think about what is better psychologically for you. let's say you invest all your money now and the market loses 50% of its value in the next six months. Are you able to handle this? Will you keep your money in the fund or panic sell when it gets to low? If your think you might panic sell, spreading out the investment over time might be the better option for you.

  • The probability of the market losing 50% is extremely low, and it's just as likely that the market will lose 50% tomorrow as it is that it will lose 50% immediately after the OP finishes putting as their money in through a SIP. Commented Jun 2, 2019 at 16:45

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