It is probably the first advice any investment advisor will tell you.
It is an indirect way of saying: “don’t make any Lumpsum investment in equities”. There’s a good reason for it.
With the stock market being highly volatile, there is a good chance you could end up investing in a market high. And when the market corrects, you are swayed by fear of loss. Even if you are aware that it is not a loss, you might regret your decision for missing out on buying cheap.
Warren Buffet says,
“What you need is the temperament to control the urges that get other people into trouble in investing.”
Once your emotions get involved, your temperament is thrown out of the window in the stock market.
So, should you never make any lumpsum investment in mutual funds?
It’s better to not invest in lumpsum. Investing through SIP and the benefit of Rupee Cost Averaging is all you need. But in some rare special scenarios,
You can, indeed, make a Lumpsum investment in equity mutual funds. But only in when this happens.
What happens? Discover your answer in the video below!