Best Ways To Invest Lump Sum Amount In India

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There may be instances where one may come across a situation where you have a lump sum amount in your hand and you have no idea where to invest them.

You could have got a bonus, sold a property, site or any invested amount you are planning to invest in.

It is always suggested not to put all your eggs in a single basket. Before considering any financial instrument consider your risk so that you balance your portfolio accordingly.

Here is a guide which will help you with various investment options which you can consider.

Emergency fund

Setting aside emergency fund is important as it will help you on a rainy day.

One should calculate and set aside an amount so that you lead comfortable life even after the financial disturbance.

The fund if untouched can be used next year where one may come across better investment options.


Concentrate on asset allocation

Allocating right asset and making right decisions matter depending on the amount. Investing differs with individuals risk capacity and financial commitment.


Real Estate

Real estate can be a better option when if one has not invested in real estate before. One can use the amount for down payment of any property. Or can pay off the earlier loan and look for a new property as an additional investment.

Liquid Funds for Very Short Term

When you need time to look and select property till then instead of keeping money ideal, one can park in liquid funds which can be easily liquidated. This will ensure that you earn some returns in the short term.

Park In Short Term Debt Mutual Funds

If you are a risk-averse individual and tax is not a matter then one can invest in short-term debt funds. Tenure may differ from 6 months to 12 months.

Long Term Funds for Tax Savings

One can look to invest in long-term equity funds to generate higher returns along with associated risk. Investing in a long term will provide you with tax benefits.

If you are risk averse, you can consider investing in best long-term debt funds which will generate good returns with time.


Systemic Transfer Plan

This is one of the best option when markets are peak and need correction. In this method, you invest in debt mutual fund and direct them to equity mutual fund by systematic transfer Plan (STP). By doing so, you are reducing the risk of investing a huge amount in equity mutual funds.

Read more at: /personal-finance/investment/2015/06/best-ways-where-how-you-can-invest-lumpsum-amount-india-368819.html


Invest in Safer Instruments

Consider safer instruments as bank fixed deposit, if you are in higher tax bracket you can consider tax saving fixed deposit. However, this comes with a lock-in period of 5 years. So, do not invest large sums here.

PPF is another best option when looking at tax saving and safety. Government securities and inflation-indexed bonds are another option for safe returns. However, it must be noted that you cannot invest large sums every year and PPF has a cap of Rs 1.5 lakhs per year.


Story first published: Friday, June 19, 2015, 11:16 [IST]
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