Can I invest a lump sum in equity MFs to increase my equity allocation from 45% to 65%?

Published on / By M. Pattabiraman Twitter: @pattufreefincal

Published: November 27, 2025 at 6:00 am

A reader asks, “Can I invest a lump sum in equity MFs to increase my equity allocation from 45% to 65%?”

A 65% equity exposure is not that high, but what matters is, do you have a strategy to reduce risk progressively as you head towards the goal deadline? As we have shown, this can be done well in advance and not just before “three years,” as many “experts” proclaim. See: How to systematically reduce risk in your investment portfolio. So even if you get to 65% equity, how long you will keep it at that level matters.

Technically, if you have access to extra cash or some liquid debt, you can consider investing the cash into equity or rebalancing from debt to equity. However, your capital market experience and sense of loss or regret matter.

How would you react if, after investing the lump sum, the market either crashes or takes another five years to recover? The answer to this is not an STP, as many investors believe.

I could run an STP for 12 months and gradually deploy the lump sum, but once the STP stops, there could be a crash or poor returns for several years, which amounts to more or less the same thing.

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Therefore, assuming this is for a long term goal, you can gradually invest the lump sum into equity. There is no need for STPs. You can manually transfer the amount in small chunks directly from your SB account to the equity funds.

However, be mentally prepared to face poor returns. Also, do not assume deploying the lump sum in the current market will fetch better returns than during a bull run. In the long run, it all evens out to the same benefit!

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  3. Which will fetch more returns over 15 years, a SIP or a lump sum investment?
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