Do you have surplus amount of cash lying around? Or maybe you had a sudden influx of substantial amount of money? Are you looking to make a lumpsum investment? Look no more. This article covers a few investment options where you can make a lumpsum investment considering your financial position in mind. Read on to know more.
Following are a few best investment options for lumpsum investment in 2021:
- Immediate annuity plan
Are you seeking for a stable and regular income? Then immediate annuity plans might just be the perfect option for you to make a lumpsum investment. Investments in these investment options are eligible for a tax deduction of up to Rs 1.5 lac p.a. u/s 80CCC* of the Income Tax Act, 1961. If you decide to go forward with immediate annuity plans, you must be aware that the annuity received on these investments are taxable in the hands of investors. The tax paid by you would be dependent on the income tax slab bracket you belong to. So, if you are in the higher tax brackets, then there would be hardly any profits after tax (PAT) left for you. Also, returns on annuity plans are substantially lower than fixed income securities such as bank fixed deposits (FD).
- Senior Citizen Savings Scheme (SCSS)
Are you looking for an investment option that caters to your retirement goals? Then you might want to make a lumpsum investment in these savings scheme. These investment options are ideal for investors who are nearing their retirement as they are backed by the government of India and thus are relatively safer investment havens. These schemes offer deduction under Section 80C of the IT Act, 1961. So, you can avail a tax deduction of up to Rs 1.5 lac per annum by investing in these securities.
- Short-term debt funds and liquid funds
Are you a risk-averse investor? Do you freak out by the mere thought of market volatility? Then you’d probably make a lumpsum investment in fixed-income securities. Examples of such investments include short-term debt funds and liquid funds. Though they are relatively safer investment options than equities, they do not have the potential to generate significant returns. Usually, an investor does not invest in these securities with the objective of wealth creation. Rather the underlying objective of these securities is to preserve the wealth of the investors. So, if you have a low risk appetite and wish to invest in highly liquid instruments, then short-term debt funds and liquid funds are the right bet for you.
You must understand that irrespective of the investment options you decide to go forward with, there are several factors that should be considered before making this investment decisions. These factors are safety, liquidity, risk appetite, age, expected returns, investment duration, investment goals, etc.
You can also evaluate the future returns on your investments using a lumpsum calculator. A lumpsum return calculator is very easy to use. You just have to input your lumpsum investment, expected rate of returns, and investment horizon. And voila! The investment tool will provide you with an estimate value of your investments in the future. Happy investing!