During any stage of your life, you may require funds for specific purposes. Thus, it is necessary for you to build a substantial wealth corpus. One way to do so is by putting your money in one time investment plans or lump sum investment options. This is an effective investment decision which will assist you in obtaining capital appreciation and better long-term gains.
Go through the following sections to learn about one time investment plans in detail.
A one term investment is a type of investment wherein an individual decides to invest the entire corpus in one go for a specified time frame. For example, if you decide to invest the total amount that is available to you towards a particular scheme, it will count as a one-time investment.
One-time investment plans offer various benefits to individuals. For instance, these investment avenues provide the power of compounding, which helps in generating better long-term returns. Thus, this kind of investment is viable for many financial objectives, including your child’s education, buying a house, lifestyle and more.
However, when it comes to investments, almost all options play a role depending upon your personal goals and expectations. Time is one crucial factor in determining which instrument may work the best for you. Another factor you should consider while choosing the best one time investment plan is your risk tolerance. For instance, equity investments carry substantial risks but, at the same time, offer significant returns. On the other hand, debt investments are a safer bet, but they offer limited returns.
Considering all these factors, here are a few one-time investment instruments you can consider putting your hard-earned money:
Find out more about these instruments below.
If you are considering staying invested for just a year, consider investing in the following one time investment plans:
You can consider investing in short-term debt mutual funds if you have a shorter investment horizon. These funds are open-ended and risk-averse. They also offer higher security as these funds invest the corpus in high-rated debt options, including corporate bonds, government bonds and treasury bills.
This is one of the more secure investment options if you are unwilling to take much risk. Post office term deposits feature a tenure ranging from 1, 2, 3, to 5 years. Further, they are backed by a sovereign guarantee, and the Indian government fixes the rate of returns every quarter. The investments you make will generate returns at the current rate.
Fixed deposits are one of the most traditional investment options present in India. If you have a lump sum corpus for disposal, you can put it towards a fixed deposit. They offer much higher interest rates than what you may get from a bank savings account. Further, investment in fixed deposits remains highly secured.
Recurring deposits are a suitable option if you wish to invest a fixed amount regularly with your bank. Upon that, you will get a lump sum after the tenure ends. Investing in RDs will also help you gain financial discipline, which will prove beneficial in the long run.
These are debt funds which invest in short-term assets, including government securities, treasury bills, commercial paper and much more. Considering short-term securities prices do not fluctuate as often, liquid funds offer stable returns. Further, the redemption process in liquid funds is processed within one business day, making it more accessible.
To plan your investment for 5 years, you need to understand all the available investment options thoroughly. This will help you make a wise investment decision.
Here are a few best 5-year investment plans you can consider investing in:
Mutual funds can be a viable investment option if you want to balance the returns and risk over the long term. There are various funds that you can put your money in, depending upon your financial goals and risk-taking capacity. For instance, you can consider placing a lump sum amount as an investment towards Navi Large Cap Equity Funds to meet your financial goals that are at least 5 years away. Alternatively, you can also consider investing via Systematic Investment Plans (SIP), with a sum of as low as Rs. 500.
*Mutual Fund investments are subject to market risks, read all scheme-related documents carefully
Stocks make for another viable option when it comes to one-time investments for an extended tenure. You might generate significant gains by investing in the stock market for the long term, provided that you invest the corpus towards financially strong firms. However, before embarking on this route, consider gaining an in-depth knowledge of the stock market and investing according to your risk-taking capacity.
Unit-linked insurance plans can help you plan your long-term savings and offer financial protection. With this plan, you get the option to choose from a host of low, medium and high-risk investment options. You can select an appropriate plan as per your risk appetite. Moreover, upon completing the lock-in period, you can make partial withdrawals.
This is also called tax saving FD and is a great way for you to build your wealth without taking much risk. Further, by investing in this one-time investment plan, you become eligible for tax deduction under Section 80C of the Income Tax Act. You can also renew your 5-year FD upon maturity.
PPF and EPF are savings-cum-tax-saving options that can help you build a substantial retirement corpus while saving taxes. Under both these schemes, you are eligible to withdraw a specific amount of money in case of an emergency. Further, you can also limit your tax outgo by investing in these one time investment plans.
One time investment plans are a viable option if you have a substantial amount of money with yourself. Such an investment option can exhibit the following advantages:
Generating profits from investing in capital markets depends significantly on market performance. In the short term, prices in the market might fluctuate. Thus, the sum you put towards short-term investments might not get enough time to adjust to these fluctuations. However, in the long run, gains cut off the losses. Thus, through one-time investment, you can grow your wealth abundantly.
One-time investment option gains from the power of compounding. Furthermore, the dividends generate interest every subsequent year. With this investment option, the entire corpus remains invested for an entire term. Thus, you receive better returns in the long term.
Investments that consist of multiple stages require subsequent transaction charges every time you invest a sum. But, with one-time investment options, you are required to pay the transaction fee only once. This results in lower costs.
Although one time investment plans offer a plethora of benefits, there are some disadvantages attached to these investment instruments. Find them below:
While investing in one-time investment plans, you have to consider taking higher risks. This is because the market is extremely unpredictable, and the plan that you buy at a significant cost might drop down in the future, causing unfortunate losses.
One-time investments require a lump sum amount at once. Thus, you may put all your savings towards an instrument in one go. This can result in future financial crunches, putting a strain on your finances.
The rule of thumb to consider before investing in one-time investment plans is to avoid hurrying while investing in a scheme. Listed below are a few other factors that will help you make an informed investment decision:
Know the current market conditions to determine whether it is viable to invest via one-time investment plans now or not. This factor is a useful consideration for all types of investments, especially for one-time investments, as it consists of a lump sum amount.
Before investing in a one-time investment plan, evaluate its past performance and assess the estimated returns it can produce in future. Following this, determine whether the scheme meets your expectations and decide accordingly.
Considering the above-mentioned sections, it is evident that one-time investment plans are a feasible investment instrument, through which you can address your near-term and long-term financial goals. However, remember to be patient and avoid making emotional investment decisions.
If mutual funds are a go-to option for you, invest with Navi Mutual Fund. You could explore a wide range of low-cost index funds along with a few fund-of-funds with Navi.
*Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
In a lump sum mutual fund investment, you invest a large corpus at once towards a scheme. On the other hand, when you invest through SIP, you make disciplined investments for a specified time frame. The investment amount here can be as low as Rs.100.
For short-term capital gains arriving from a liquid fund, you will have to pay tax as per the income tax slab you fall into. Meanwhile, in case of long-term capital gains from a liquid fund, you will have to pay tax at 20%.
Unit-linked insurance plans feature a lock-in period of 5 years. During this time frame, you are not eligible to withdraw or liquidate the funds that you have accumulated. However, after the completion of this period, you can make partial withdrawals.
EPF is a retirement plan specifically crafted for salaried employees, wherein both the employee and the employer contribute a fixed amount towards this scheme. On the other hand, PPF is a retirement savings scheme available for all individuals.
Yes, you can partially withdraw your SIP investment. However, before moving forward, ensure that you know about the exit load. Additionally, you must also keep the tax implications and lock-in period in mind before making a decision.
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