Securing Your Future: Creating a One-Time Investment Plan


Securing Your Future: Creating a One-Time Investment Plan

 
Plan Investment
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Introduction

The purpose of investments is to build a secure financial future. While you may be comfortable with your income now, increasing inflation can put your financial security at risk. When you have a lump sum of cash, you must explore investment opportunities to generate better returns.

Investing a lump sum amount in a specific scheme for a pre-determined duration will help you build wealth for your future. In this blog, let’s explore one-time investment plans and understand the importance of choosing the right scheme. 

What is a One-Time Investment Plan?

With a one-time investment, you can invest much money in one go based on your risk appetite and goals. Generally, such plans are ideal for bigger goals like retirement expenses, marriage of children, kids education, etc. 

When you invest a large sum of money, you are putting a large capital at risk. So, look for long-term plans that distribute your risk over time. This allows you to maintain robust returns despite market fluctuations.  

Some of the advantages of a one-time investment are:

  • A single upfront payment that doesn't affect your monthly budgeting

  • Varied choices like fixed deposits, bonds, mutual funds, etc. 

  • Better profits in the long run

  • Flexibility in choosing short-term or long-term plans

  • More cost-effective concerning processing fees

  • Better tax saving potential as you only have to pay tax when you withdraw from your investment 

Also, there are a few points to remember before choosing a one-time investment:

  • Putting all your money in a single instrument limits diversification

  • A single-time investment will not teach a disciplined investment strategy

  • It is not suitable for those looking for short-term gains

  • Due to market volatility, it is difficult to predict the performance of investment throughout 15 to 20 years

  • Generally, a one-time investment is not associated with higher returns

How Does One-Time Investing Work?

When you receive a large bonus, save up a significant corpus, inherit some cash, or liquidate properties, leaving it ideal in a savings account will not be hugely helpful. You can put that money to work for you and accumulate returns. 

  • Explore investment options – Choose a financial instrument depending on your financial goals and risk tolerance. Some plans may have minimal investment requirements. 
  • Determine investment tenure – If you don't need the cash for the next few years, consider a longer tenure. A higher investment amount invested for a longer period has more potential to generate better returns. 
  • Understand investment returns – Based on the type of investment, you will get your returns. For example, fixed deposits pay a fixed interest rate; bonds can provide a steady income. Even though equity investing has a high risk, the reward potential is also high. 
  • Let compounding work its magic – Significant one-time investment can be fruitful, particularly with a longer duration. Reinvest your return or interest into the scheme to leverage the power of compounding. This can help your corpus grow exponentially. 
  • Withdrawal at maturity – You can get the principal amount and the returns when the investment term concludes. These returns may be from dividends, accumulated interest, or capital gains. Remember, if your investment fails to perform, it can result in a loss, too. 
  • Taxation after withdrawal – Based on short-term or long-term investment, the gains you obtain from your one-time investment may be categorised as short-term or long-term capital gains. So, it will be taxed accordingly. Some schemes also offer tax-free returns.

Who Can Invest in a One-Time Investment Plan?

Technically, anyone can invest in the one-time investment plan. Based on the scheme, there is a minimum requirement for lumpsum investment. You can make a lumpsum investment if you meet this criterion. However, one-time investing is suitable for the following types of candidates:

  • Long-term planners with clear objectives for the future
  • Strategic market-savvy investors who want to capitalise on market conditions
  • Newcomers who want to start investing with a simple scheme
  • Risk-averse investors who look for stable returns over a long-term
  • Parents of girl children who wish to secure their daughter's future can use Sukanya Samriddhi Yojana
  • Professionals whose job involves receiving a sudden influx of money in terms of commissions or bonus

Options for One-Time Investment

Always choose investment instruments based on your goals and expectations. With both online share trading and online stock trading, opting for a zero brokerage trading account in India is a smart choice. The following vehicles are great options to invest in:

  • Equity funds – Lower risk than investing directly in the stock market because of professional management and diversification. Under the old tax regime, you can invest in an Equity Linked Savings Scheme with Rs 1.5 lakh tax deductions under Section 80C. Such plans have a lock-in period of 3 years and a tenure of 5 years or more. 

  • Debt funds – These carry lower risk than equity funds. Here also, you get diversification benefits. Such schemes offer steady returns, but there may be tax implications. Tenure is generally three years or more. 

  • Liquid funds – They are useful for saving money without spending until you decide on the best investment plan. There is minimal exit load, and you can easily transfer money from liquid funds to any other type of fund. It has low risk, and profits have lower taxes after 36 36-month holding period. 

  • ULIPs – If you are looking for tax-efficient investment plans, you can invest in ULIPs and get tax deductions under Section 80C. ULIP plans to invest in both debt and liquid funds.

Conclusion 

One-time investment plans offer better capital growth. When you choose a long-term option, the principal has good potential to appreciate despite market conditions. Staying invested for a long duration will result in higher returns, regardless of your investment type. Also, single-time investing is hassle-free and involves lower processing charges. Explore your options and choose one based on your risk profile to optimise investment benefits. 

FAQs

  1. Is there a minimum and maximum amount for a one-time investment plan?

The minimum and maximum limits vary with different schemes. With mutual funds, you can invest Rs. 500 to Rs. 1000 for a one-time investment. The upper limit is several lakh rupees, based on the option. 

  1. Is a one-time investment better than regular monthly SIPs?

When you receive a large bonus, making a one-time investment is a good idea to increase returns. However, monthly SIPs allow you to focus on your goals and maintain investment discipline. Staying invested will help you earn better returns regardless of your chosen path. 

  1. Is a one-time investment risk-free?

No, any investment carries risk. The risk may be higher or lower depending on your chosen investment vehicle. If you invest one time in equity, it carries high risk. However, if you choose debt funds, the risk is lower.

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