Lumpsum Investment: What it is and how it works - Key things to know

Lumpsum Investment: Lumpsum investment is a one-time investment in a specific scheme for a specific duration. In simple words, it is when a depositor invests a specific sum of money in a specific mutual fund scheme. A large number of investors choose to invest in lumpsum investments as it involves fewer transactions.

For instance, if you get a good bonus or have a lump sum amount left even after paying all your pre-planned obligations and expenses and thinking to invest, in that case you can invest the entire amount in a specific lumpsum investment scheme.

If an investor is looking to invest for the long term and accepts the potential risk involved, then the lumpsum investment is recommended as a variable investment strategy.

An investor is advised to calculate the rate of return for all lumpsum investments. The lumpsum calculator helps you estimate the amount you can get at the end of your investment tenure.

An investment calculator also highlights is a chosen investment scheme will meet the financial goals or not for the specific investor.

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It is generally chosen by those people who have a large amount of money to invest. When one wants to make a lumpsum investment, they can manage their investment time frame according to their risk appetite. People who want to invest a large amount often find a lumpsum investment more convenient. The power of compounding can help you reap the benefits of the interest earned on your investments for financial instruments such as fixed deposits.

Lumpsum Investment In Mutual Fund

Jyoti Bhandari, Founder and CEO, Lovak Capital, said that lumpsum investing is more advantageous when you invest in a low-market environment.

“Investing a lumpsum amount during a market high can lead to significant portfolio devaluations in the future. Instead, wait for a more suitable market condition when valuations are on the lower side,” she said, adding that lumpsum mutual fund investments are the way to go for experienced investors with a high-risk tolerance and a sizeable amount for investment.

Lumpsum Investment Plan Calculator- How it helps?

Lumpsum investment calculators help investors estimate the expected returns i.e., the future value of the lumpsum investment after the investment tenure is over. The calculator is user-friendly. These calculators give instant results for free and hence, saves Investor's time.  

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