A = P(1+r)^n
Inflation-Adjusted Future Value = A / (1+i)^n
A = Future Value
P = Investment Amount
r = Annual Rate of Return
n = Investment Period in Years
i = Annual Inflation Rate
Lumpsum invetsment is a common investment which in India invetsors will pay for their inveestment in a one go so called a lump sum where as too make an inveest doesn't have to pay a small ammount over a couple of time.To my best knowledge this is a good inveestment plan if you have a large inveestment as the money is going into something best for your selfs and if you are sure for your inveestment.
Beside ordinary investment under SEBI, lumpsum investment carry certain special rules and regulations. The main regulating body is Securities and Exchange Board of India(SEBI). One of the rules is "Know Your Customer". It simply means every bank and people selling any financial product must verify the identity and address of the investor before moneys bag become accpetable. This rule saves the country from money layer.
One must also take into account the tax implications of your investment in lumpsum investments in India, because tax is of utmost importance when it comes to investment returns. The reason why tax is so widespread when it comes to returns is that tax only depends on the type of your investment and on the date on which you hold your investment. For example, capital gains from investment in equity for a long-term basis have lesser tax implication than, maybe, short term capital gains from the same kind of investment. To make sure you are aware of how tax relates to your lumpsum investments, it is important that you speak with a tax expert or a financial advisor before making any large investments.
While investing your lumpsum amount, it is advisable to choose your investment objective and risk profile. Investment options like mutual funds, stocks, bonds, real estate & gold are available in India which have different level of risk and returns on the investment.For example, higher return on investment can be achieved by investing in stocks but there are possibility of high risk. Similarly, investing money in Government bonds have lower risk but return is also significantly low.
Finally, one should look at the credibility and track record of the financial institution/intermediary with whom you are buying your lumpsum. Ensure the institution is registered with SEBI, that it does not have any instances of unmet commitments, that it has a strong resource base, and that it has a good track record. You can also take a look at the track record of the investment products being offered to you by them to form an opinion on whom to transact with.
lumpsum investment means invest a bigger amount in one time.Systematic investment plan(sip) means we invest a small small amount in regular interval of timeBasically Both these methods have justification.
Advantages of Lumpsum Investment:
Advantages of SIP:
Before making a lumpsum investment, consider the following factors:
Here are some popular lumpsum investment options in India:
| Investment Option | Description |
|---|---|
| Mutual Funds | Professionally managed investment schemes that pool money from multiple investors |
| Stocks | Ownership in a publicly traded company |
| Bonds | Debt investment where investors lend money to an entity |
| Real Estate | Investment in physical properties or real estate investment trusts (REITs) |
| Gold | Precious metal used as a hedge against inflation and economic uncertainties |
Lastly, example of lumpsum investment in equity mutual fund. That is, you have ₹5,00,000 that is your lumpsum investment amount that you are going to invest in equity mutual fund scheme, which mean you are invested your whole ₹5,00,000 in one scheme.
Assuming the estimated standart return per annum is 12% and that the investor strives to always have the same amount of money in his pocket, the future amount of the investment according to the lumpsum calculator is.
Using the calculator, the estimated future value of the investment would be:
It illustrates by how much, through compunding, wealth can be multiplied, in a lumpsum invested made over a prolonged period in mutual funds. A lumpsum investments made in mutual funds are at risk of the market and what is achieved in terms of the return depends on the performance of the fund over the absolute market conditions.