The feeling of your bank account being credited with an unexpected source of cashflow is simply amazing. This unexpected cashflow could be the result of inheritance, sale of investments, tax refunds, or anything else. That feeling is slowly subsided with a feeling of being anxious when you can’t decide the right investment options to make a lumpsum investment. Don’t worry, we have got your back. This article aims to provide with the best investment options to make a lumpsum investment. Read on to know more.
Investment options for lumpsum investment:
Here are different types of investment catering to different investment needs where you can make a lumpsum investment:
- If you wish to achieve regular income from your investments
If you are seeking for a regular and steady flow of income, then immediate annuity plans might be the best investment option for you. These investment options offer a tax deduction of up to Rs 1.5 pa lac under section 80CCC*. Investors must take a note that the annuity received on these investments are taxable as per the income tax slab of the investor. Hence, investors who belong to the high tax slabs might not be that beneficial as there would be hardly any returns left for then post taxes. To add more to the woes, the returns on immediate annuity plans are substantially lower than that on traditional fixed deposits.
- If you are nearing your retirement
For investors on the verge of being retired, SCSS – Senior Citizens Savings’ Scheme could be an ideal investment option to part your lumpsum amount. Why, you may wonder? It’s simply because these schemes are comparatively safer investment options than other debt instruments suited for retirement. As SCSS schemes are one of the investments under Section 80C, they qualify for tax deduction of up to Rs 1.5 lac per annum.
- If you wish to invest in fixed-income instruments
If you are planning to dedicate a part of your portfolio to fixed-income instruments, then you might consider making a lumpsum investment in liquid funds or short-term debt mutual funds. However, you must be aware that as these funds are relatively safer, these schemes do not have the potential to generate significant returns. Hence, these funds are suitable for individuals who do not wish to expose their portfolio to high-risk instruments. These funds are also ideal for those investors who wish a certain level of liquidity on their mutual fund investments.
There’s another option for investors to make a lumpsum investment. If you wish to invest in equities you can make a lumpsum investment in debt funds and systematically transfer your funds to equity funds. This concept is followed by systematic transfer plans (STP). If you wish to assess the future value of your investments, you can do the same by using a mutual fund lumpsum calculator. Isn’t that cool? So, go invest your lumpsum amount in your desired investment options. Just before you choose the ideal type of investment for your portfolio, consider factors such as your age, risk profile, financial goals, investment horizon, and other factors. Happy investing!
*The tax deduction of up to Rs 1.5 lac under section 80C limit is combined with that of Section 80CCC limit