Mumbai: The biggest challenge that individuals face when the stock market is at record highs is how to invest, especially lump sum amounts. With Nifty at 20,000 nearing valuations that might be uncomfortable and mid-cap and small-cap stocks already at red-hot levels, several investors are in a dilemma on whether to hold on to cash and put money into the market following a correction. Wealth managers agree that the various pockets of the market might be a tad too stretched but advice against staying away entirely. Instead, they are advising investors to stick to simple products and spread their assets across equity, fixed deposits, and gold in their portfolios. ET spoke to wealth managers on how to invest ₹20 lakh today.

For moderately conservative investors, they suggest 50% exposure to equities and 50% allocation to gold and fixed income would still be a good option. Within equities, they are recommending index funds, or flexicap funds for large-cap allocations. Given the sharp run-up in mid and small cap stocks, investors should avoid lump sums in such schemes and allocation should be staggered over the next one year. For the more conservative, a maximum of 30% exposure to equities or asset allocator products like balanced advantage funds would work better, about 50% to fixed income and 20% to gold in challenging equity market conditions. The funds listed are based on the highest one-year returns.

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