Should I invest a Lump Sum amount or take up a SIP investment plan of Mutual Funds? This is a big question that has crossed the mind of all of us. At least, once during our working life, if not more. Well, the answer to such questions is never so easy. Most of the time, it will depend on the cash you have in hand. If you have just received a good amount of bonus. Or a pending payment. Or a bad debt has been made good. Maybe, you have just received the gratuity. That is, if you have a large enough investible surplus or a corpus ready, you might think of investing in one go. And in such times, the Lump Sum Calculator proves to be so very useful.
- You need to simply feed in a few numbers.
- Calculate the appropriate amount of your prospective investment.
- Invest in the Best Mutual Fund.
- And enjoy multiple benefits that this type of investment has to offer.
What is Lump Sum investment in Mutual Funds?
Investing Lump Sum amounts into mutual funds can get scary. Even if you are a veteran. Even though you are aware of the risks involved. The timing of the investment makes a significant impact on your returns.
It is a wise choice when the market is low. Moreover, it is highly beneficial when the Price-Earnings (P/E) multiple of the market and the specific stocks are low.
It may be Direct Equity Stocks or Mutual Fund Schemes. Generally, seasoned investors with experience and knowledge about the financial markets and having surplus cash, invest a lump sum.
Lump Sum Calculator
The Lump Sum Calculator calculates the maturity amount. After the number of years to be invested. Of a given amount you will invest. At the expected Rate of Return. This expected Rate of Return is based on the past performance of Mutual Funds.
Thereby, you get to know what you will be able to earn at a future date.
This way, by using the Lump Sum Calculator, you can ascertain the expected earnings from various Mutual Fund investments. And select the Best Mutual Fund.
Benefits of Investing Lump Sum
There is NO definite winner between Lump Sum and SIP. Both SIP & Lump Sum investment together is the way to invest! Even with regular SIP plan, you should take up an occasional Lump Sum investments. Especially, at the time of a sharp fall in the market.
1. SIP vs. Lump Sum
The investment in the best SIP may be as low as Rs. 500 per month, giving you regular savings over the long term. However, as the monthly installment is small, the actual return may not count much. Whereas, if you make a Lump Sum investment and remain invested for a long period, you get to receive the best benefits of the power of compounding. Your corpus earns an income, both through appreciation as well as interest. This income when reinvested earns compounding returns. Thereby you accumulate a significant rise in your wealth, in the long term.
2. Invest as per Market Conditions
If we use our common sense, we easily understand that investing Lump Sum when the market is at its low, would be profitable for us. We would be able to buy more units. Using the same amount. And when the market opens up, we will, surely, gain.
If you know the market. If you are able to predict the impact on the market. Of all the things that can affect the market. Whether it is a new tax, removal of an old one, change in currency, change in RBI or SEBI guidelines or regulations. Even weather conditions, good crops or bad crops. All these have an effect on the market. If you are able to understand the impact. You may choose the Best Mutual Fund for your Lump Sum Investment.
3. Selection is of your choice
You select the kind of plan you want to put your money into. As it is a one-time investment, most probably, you make sure to select the Best Mutual Fund. You make a thorough search amongst the various plans available.
You are the best person who would understand your financial requirements and limits. So you are the best person who can decide on which Mutual Fund investment will be best for your investment.
Do Check SIP Calculator.
What if the Markets are over-valued
You have just received a good amount. You check the market conditions. It is having a Bull Run. Your investment in Mutual Funds, during such circumstances, may suffer.
Unless you are careful and make smart decisions.
If the market is over-valued. And the correction is on the horizon. In such a situation, if you invest a large amount, you may stand to lose out.
So what is the way to avoid?
1. If you have a know-how
If you can sense that the market is over-valued. And will consolidate itself, soon. You may wait, in that case. Hold on to your amount, till the market corrects itself. Or, on the other hand, you may invest in Liquid Funds, meanwhile.
2. STP Route
If you are like me, and most of the general investors. You may not understand the working of the market thoroughly. We cannot tell if the market is over-valued or not. Still, there are advantages of Mutual Fund. Then the experts advise taking the STP route.
So what is STP? Using STP mode, you instruct your selected Mutual Fund to switch a particular number of units, at regular pre-defined intervals. These units are then switched and invested into another Mutual Fund from the same Fund House.
So the entire sum can be invested in a Liquid Fund or an Ultra Short term Fund. You can design your STP in a way that every month, a fixed amount, for example, Rs. 5,000 is automatically transferred from that Liquid Fund in an Equity Mutual Fund. This is the advantage of STP. The money doesn’t sit idle.
If you are hesitating to finalize the plans and investments, take the advice of experts. Take the advice of WealthBucket.
Get registered with us and let us create a well-balanced portfolio for your money. With the appropriate mix of Large-Cap Mutual Funds, Multi-Cap Mutual Funds, and Small-Cap Mutual Funds, as per your needs.
Call Now at +91 8750005655. Or email at email@example.com.
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