NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Mutual Funds
Caselet: Rahul Deshmukh, a 35-year-old salaried client, wants to invest a monthly amount for a goal 15 years away, and he can tolerate market volatility. He wants to avoid trying to time the market. Which approach is most consistent with his needs?
A SIP in an equity-oriented diversified scheme suits him best. Regular monthly investing averages the purchase cost and removes market timing, while equity offers growth potential over a 15-year horizon that matches his tolerance for volatility. Overnight and liquid funds lack growth and an SWP is for withdrawals.
- AA lump sum in an overnight fund and holding for 15 years
- BA Systematic Investment Plan (SIP) in an equity-oriented diversified schemeCorrect
- CA Systematic Withdrawal Plan from a liquid fund
- DA single investment in a fixed maturity plan of 3 months
Explanation
A SIP spreads purchases over time, averaging the cost per unit and removing the need for market timing. An equity-oriented diversified scheme suits a 15-year horizon and high risk tolerance. Overnight and liquid funds would not give growth, and an SWP is a withdrawal tool, not an accumulation tool.
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