Who doesn’t love the feeling of gratefulness when their bank account is credited with an unexpected flow of money. This stream of income could be in any form – lottery, court settlements, tax rebate, inheritance, retirement fund, sale of investment, etc. However, this feeling is soon replaced by a state of anxiousness and nervousness. Why, you may wonder. Well, investors often beat themselves up in the process of choosing the right type of investment for their portfolio. Don’t fret. In this article, we will offer you with a list of investment options that may be suitable for your lumpsum investment.
Investment options to make a lumpsum investment:
Keeping in mind the varying needs of investors, here is a list of investment options that can help you achieve your financial objectives:
- If you are on the lookout for a regular and stable source of income
Investors looking to have a stable source of income might consider investing a lumpsum amount in annuity immediate plans. As per Section 80CCC* of the IT Act, 1961, these investment options are eligible for a tax deduction of up to Rs 1,50,000 each year. However, investors investing in annuity immediate plans must be aware that the tax applicable on these investments are dependent on one’s income tax bracket they belong to. What this means is that these investment options might not be an ideal investment option for someone belonging to the highest tax slab as they would be left with little to no returns on their investments post tax implications. What’s worse, these funds offer significantly lower returns as compared to traditional FDs (fixed deposit).
- If you are about the approach your retirement
If you are someone who is on the verge of getting retired, then you might consider investing in either SCSS (senior citizens savings scheme) or POMIS (post office monthly income scheme). These investment options stand out from traditional fixed-income securities in a sense that these investment options are relatively safer than the traditional debt schemes. Another feature that makes these investment options quite desirable among investors is the tax deduction under Section 80C of up to Rs 1.5 lac p.a. they offer to investors.
- If you wish to invest a lumpsum amount in fixed-income securities
Liquid funds or short-term debt funds might be an ideal investment option for investors looking to park their lumpsum investment in fixed-income instruments. Although these investment options offer investors with relatively higher liquidity as compared to other types of investment, one must be complacent of the fact that they are also accompanied with relatively lower returns as compared to other types of investments. Hence, these investment options might be suitable for someone who is comfortable with low returns in exchange of less volatility and risk.
Hope that the above-mentioned investment options will help you in your investment journey to choose the right type of investment for parking a lumpsum amount. Note that, as an investor before parking a lumpsum amount, you must always be careful about the timings of the market. If you are unsure when to enter or exit the markets, or which investment option might be more suitable for your investment portfolio, you might consider availing of the services of a financial expert. Happy investing!