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How to invest lump sum amount in mutual funds


It is important to deploy any lump sum one receives into investments. One of the ways to do it is to invest the funds in a liquid fund and then transfer little by little from the liquid fund to an equity fund.

To invest in mutual fund schemes, investors must be KYC compliant. This can be done at the AMC office or registrar offi ce or at a KYC Registration Agency (KRA). There is a standard KYC form to be filled by the investor. Documents such as copies of prescribed address proofs and identity proofs must be furnished along with the form.

Choice of schemes
Once KYC formalities are done, the investor has to decide which schemes to invest in. Since the investor is going to set up systematic transfer plan (STP), he needs to choose a liquid fund and equity fund of the same fund house. It is advisable to consult an adviser in order to make a rational investment choice.

Investing in liquid fund
A mutual fund application form for purchase must be filled to invest in a liquid fund. A cheque in favour of the specific liquid scheme should be attached with the application form. If the investor is not taking the services of an adviser, he can submit the form at the AMC office himself or investor service centre indicated by the fund house.

Systematic transfer

Along with the mutual fund application form, an STP form must be submitted. It must indicate the transferor scheme —the liquid scheme and the transferee scheme—the equity scheme to which the transfer must be made. The transfer frequency can be weekly, fortnightly, monthly or quarterly. The investor can choose the period for transfer.



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