Can I invest lumpsum in existing lump sum?
Mutual fund investments are generally undertaken for one specific purpose. The said purpose is to accumulate wealth for the future. The income generated through mutual funds might help you with taking care of day-to-day expenditures after retiring. After retiring, you opt to say goodbye to the monthly income that you receive through full-time employment. That’s why a lot of people treat retiring as a major decision. Before deciding to take up retirement, it is very important for you to assess your financial situation.
To invest in mutual fund schemes, you firstly need to find a suitable asset management company, i.e., AMC. After finding it, you need to select one of the different types of mutual funds that are available as an investment option in the Indian market. Once you have identified the suitable mutual fund variant, you are required to identify the suitable mode of investment. There are two options, namely a systematic investment plan (SIP) and a lump-sum investment. Under SIP, you can opt to pay for your mutual fund investment every month instead of making a one-time payment like in cases of lump-sum investments. Moreover, through these plans, it is possible for you to make full use of the automate payments feature. Lump-sum payments, on the other hand, function differently than systematic investment plans.
What are lump-sum investments?
For lump-sum investments, all you need to do is make a one-time payment for an investment in your mutual fund scheme. In case you are considering signing up for the lump-sum investment option, it is important for you to make sure that you have access to the required amount for investment. But it is not the case that you have access to the required amount of investment. If it ever happens that you don’t have access to the required amount of investment, you need to hassle for arranging the funds.
But, regardless of its drawbacks, it is important to note that if you find this mode convenient, there is a benefit of a lump-sum payment for mutual fund investment. The said advantage of lump-sum investments is that they just need a one-time payment. In case you are a self-employed investor who does not have a consistent source of income, you can consider signing up for the lump-sum mode of investment. Unlike lump-sum investments, systematic investment plans are known to require a predetermined amount to be deposited on a regular basis. If you are a type of investor who relies on seasonal revenues, you may find it hard to keep paying for a structured investment plan like SIP.
What are the features of lump-sum investments?
Listed below are some of the features that are associated with lump-sum investments:
- They require a minimum number of investments:
As stated before, lump-sum investments require a one-time investment. The minimum amount that most mutual funds require for lump-sum investment is ₹5,000. But, after the initial lump sum investment, it is possible for you to make subsequent investments in multiples of ₹1,000 in the same mutual fund scheme you signed up for.
- It is possible to hold on for a longer time horizon:
It is possible for you to hold a lump sum mutual fund investment in equities for a longer time duration. The minimum recommended duration is three years. If it is short-term appreciation that you seek, you could consider signing up for a debt fund or liquid fund.
How to invest in lumpsum?
If you are considering a lump sum investment in mutual funds, you need to approach a financial advisor or directly contact the asset management company. After that, you need to fill out the KYC form. After filling out the form, submit documents. It is essential to do so for creating your mutual fund account.
Is it possible to invest lumpsum in existing lump sum?
The answer to this question is yes. Under lump-sum, it is possible for you to invest any sum at any time. All that’s required is that you have the required amount of investment at your disposal.