Problem with investors is the mixing up of two asset classes which served different purposes:-
1. Provident fund is a safe, Govt assured, tax-free investment avenue. Earlier it was fully tax-free (probably till you retired) without a limit. There was no other similar avenue giving all these benefits with safety.
2. When you go into MFs, the risk quotient increases. Assuming that you're referring to investing in equity MFs, then you've changed the 'character' of investments.
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In effect what you had done was that, as you went closer to your retirement, you decided to convert your safer investments to more volatile ones (or riskier ones, depending on your perception). If you look at it only from tax angle, probably that is just a one-sided view. And doing the SIPs could have been done at any point of time in service earlier too.
And if you wanted rupee cost averaging only which SIPs provide, even bulk amount can be done that way using STPs (Systematic Transfer Plan) through a safer debt fund to corresponding equity fund.
Asset Allocation is an extremely important part of long-term investing. In fact, Asset Allocation is the only free lunch in investing!
But most of the investors never realise this and keep flitting between asset classes, seriously hampering the process of wealth creation.
