A reader sent us the following question. “I’m an aspiring DIY investor and frequently read your posts on freefincal. I have also attended the goal-based learning tutorials on freefincal and found them very useful”.
“Most of the analysis and approach I have read is on systematic investment planning. My question is, “How to plan, monitor and manage a lump sum DIY investment strategy”.
“To put it in context, I’m 53 years old, and by God’s grace, I can fend for my family’s present needs, my child’s education and retirement needs. I inherited wealth from my late father, who passed away a few months back. As a custodian of this inheritance, I would like to grow it and pass it on to my two-year-old daughter after 20 years. Could you point me to any existing content or advise me on how to manage this intelligently?”
There are two considerations here:
- Are you sure you do not need this money for your future goals? If unsure, validating your investment strategy (excluding this inheritance) with a SEBI-registered fee-only financial planner may be a good idea.
- How much capital market experience do you have? In other words, have you invested in equity or equity mutual funds long enough to appreciate their risks? Are you comfortable with debt mutual funds?
We will assume that the answer to the first consideration is, “you are sure”, and proceed.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! 🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
Suppose you do not have capital market experience. In that case, your portfolio does not have much equity or debt funds; professional help from a SEBI-registered fee-only financial planner becomes crucial to gradually deploy this amount into the market – the extent of which can be discussed.
If you are comfortable with the capital markets, then we recommend the following:
- Choose equity exposure from 50% to 70%. The rest can be in fixed income.
- For equity, a simple Sensex or Nifty 50 index fund would suffice. This will ensure there is no need for performance reviews. Depending on your comfort level, you can split the investment among 2-3 index funds.
- If you like to add some active funds, aggressive hybrid funds can be considered.
- For the fixed income, there are many candidates.
- You can create an all-weather debt fund portfolio using short-term (money market funds) and long-debt fuds (corporate bond and gilt funds).
- You can set up a 10-year FD in a safe (meaning too big to fail) bank since the rates are reasonably good now.
- A PPF account in your daughter’s name (assuming you already don’t have one for college fees etc.) The annual subscription can be paid by redeeming from the money market fund, or you can set up a short-term FD for the first few years or even use an arbitrage fund to lower the tax incidence.
- Conservative hybrid funds can also be used.
This portfolio should be reviewed annually and rebalanced if the asset allocation deviates by more than 5% on either side.
Deployment: This is perhaps the most important consideration. If the inheritance is lesser than your net worth, then it can be invested in equity and debt funds rather quickly – money market in one shot, gilts or corporate bonds over a few months and equity in, say, six months. If the inheritance is much higher than your net worth, these timelines can be extended more, say over 12-18 months.
If you do not have capital market experience and the inheritance is substantial compared to your net worth, starting with only a 10% to 20% equity allocation would be best. This can be gradually increased.
Even if you have significant capital market experience, never make the mistake of going overboard into equity. A balanced portfolio (even 50% equity and 50% fixed income) will get the job done. This is as far as my thinking takes me.
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
![Follow Freefincal on Google News Follow Freefincal on Google News](https://freefincal.com/wp-content/uploads/2023/07/Follow-Freefincal-on-Google-News.jpg)
![Subscribe to the freefincal Youtube Channel Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.](https://freefincal.com/wp-content/uploads/2023/07/Subscribe-to-the-freefincal-Youtube-Channel.jpg)
![Follow freefincal on WhatsApp Channel Follow freefincal on WhatsApp Channel](https://freefincal.com/wp-content/uploads/2023/09/Follow-freefincal-on-WhatsApp-Channel-300x83.jpg)
![Listen to the Lets Get Rich with Pattu Podcast Listen to the Lets Get Rich with Pattu Podcast](https://freefincal.com/wp-content/uploads/2023/07/Listen-to-the-Lets-Get-Rich-with-Pattu-Podcast.jpg)
![Lets Get RICH With PATTU podcast on YouTube Lets Get RICH With PATTU podcast on YouTube](https://freefincal.com/wp-content/uploads/2023/08/Lets-Get-RICH-With-PATTU-podcast-on-YouTube-644x362.jpg)
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
About The Author
![Pattabiraman editor freefincal](https://freefincal.com/wp-content/uploads/2019/11/Pattabiraman-author-freefincal-article-bottom.jpg)
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
![Both boy and girl version covers of Chinchu gets a superpower](https://freefincal.com/wp-content/uploads/2021/02/Article-bottom-Chinchu-gets-a-superpower-front-cover-for-girls-and-boys.jpg)
![Feedback from a young reader after reading Chinchu gets a Superpower (small version)](https://freefincal.com/wp-content/uploads/2021/02/For-bottom-Feedback-from-a-young-reader-after-reading-Chinchu-gets-a-superpower.jpg)
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
![You can be rich too with goal based investing](https://freefincal.com/wp-content/uploads/2016/11/You-can-be-rich-243x300.jpg)
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
![Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you want](https://freefincal.com/wp-content/uploads/2017/05/2-mini-Cover-pink.jpg)
Your Ultimate Guide to Travel
![Travel-Training-Kit-Cover-new](https://freefincal.com/wp-content/uploads/2019/11/Travel-Training-Kit-Cover-new.jpg)