Nothing beats the feeling experienced when your bank account is flooded with an unexpected source of income flow. This unexpected stream of money could be in any form – either through the sale of investments, inheritance, lottery, tax refunds, etc. This feeling is gradually replaced by a feeling of nervousness and anxiousness – you can’t choose the right investment option for you to make a lumpsum investment.
Don’t worry, you aren’t alone. In this article, we will try to offer you a list of investment options that can be ideal for a lumpsum investment.
Investment Options to Make a Lumpsum Investment
Following is a list of different types of investment, keeping in mind the varying needs of investors wherein you can plan to make a lumpsum investment:
- If you are someone who wishes to earn regular income from their mutual fund investments:
Annuity immediate plans could be an ideal investment option for investors looking for a steady and regular source of inflow of cash. These investments provide tax deduction under Section 80CCC* of the Income Tax Act, 1961 of up to Rs 1.5 lac per annum.
However, one must note that the annuity received on these tax-saving investments is a taxable basis on the income tax slab they belong to.
As a result, someone who falls into the higher side of the tax slab might not enjoy many benefits from these investments as there would be little to no returns left post-tax implications.
To make matters worse, the returns on these investment options are significantly lesser than traditional fixed deposits (FD).
2. If you are someone who is about the enter the retirement phase:
If you are about to get retired, then SCSS (senior citizens savings scheme) or POMIS (post office monthly income scheme) could be an ideal type of investment for you. What makes these investment options that traditional debt schemes are that these investment options are relatively safer than most debt securities ideal for retirement. Note that both these investment options are a part of Section 80C tax-saving investments and as a result offer tax deduction under Section 80C of up to Rs 1.5 lacs p.a.
3. If you are looking to park your lumpsum investment in fixed-income instruments:
To make a lumpsum investment in fixed-income securities, you can consider dedicating a part of your investment portfolio towards short-term debt funds or liquid funds. However, before you invest in these mutual fund schemes, you must be aware that these instruments are relatively more liquid and safer, they do not have the potential to generate substantial returns for an investor. This is why these investment options are ideal for someone with a substantially low-risk appetite.
If you are looking to assess the future value of your mutual fund investments, you can use a lump sum calculator for the same. Happy investing!
The tax deduction of up to Rs 1.5 lac under section 80CCC limit is combined with that of Section 80CC limit