Investment has become a significant aspect of a person’s life. People are finding ways to make money around the clock, whether it’s through the submission of videos to internet platforms that receive millions of views, or just by placing their money in the right financial security. However, you will need the proper knowledge to position your money where it will provide the most passive income. This article will not only direct you in the direction of such resources, but it will also instruct you on the subject of the Best Mutual Funds for Lumpsum Investment in 2022, allowing you to get the best possible outcomes in accordance with your specific investment aims.
What Is A Mutual Fund?
In layman’s terms, a Mutual Fund is a sort of organisation that pools money from multiple people/investors that have a common investment goal and invests it in various financial products such as stocks and bonds. A SIP (Systematic Investment Plan) or Lumpsum are the most typical ways to invest in it. In a lumpsum mutual fund, you invest the full amount in a single payment at a specific time, as opposed to several little sums over time in a SIP.
Mutual funds are managed by professional fund managers, who charge a Management Expense (also known as an Expense Ratio) of 1-3% of your entire investment to help you earn more. Mutual funds are an excellent kind of investment since they provide investors with several benefits such as liquidity, diversification, and expert management.
What Is Lumpsum Mutual Fund Investment?
Mutual fund investments can be made either in a lump sum or through a Systematic Investment Plan (SIP). In a mutual fund, an investor makes a one-time, lump-sum contribution that is held for the duration of the fund. For those who can commit to a 10-year investing horizon and have some familiarity with the market, a lump sum investment in a Mutual Fund could be the best option. Investing a lump sum amount has its benefits and drawbacks, despite the fact that systematic investment plans (SIPs) for mutual funds are preferable since they do not reduce cash flow suddenly. Before putting money into a mutual fund, it’s important to complete your research on the fund’s holdings and performance in both up and down markets.
Best Mutual Funds For Lumpsum Investment 2022 (Basis 3-year Returns)
|Fund Name||1Y Returns||3Y Returns|
|Quant Infrastructure Growth Direct Plan||13.85%||56.01%|
|Quant Tax Growth Direct Plan||19.26%||42.55%|
|Bank Of India Small Cap Growth Direct Plan||18.33%||42.28%|
|Canara Robeco Small Cap Growth Direct Plan||7.42%||41.80%|
|Quant Flexi Cap Growth Direct Plan||14.69%||41.53%|
|Quant Mid Cap Growth Direct Plan||15.30%||39.65%|
|PGIM India Midcap Opportunities Growth Direct Pl||21.25%||39.45%|
Since lump sum investments need a substantial amount and are believed to provide good long-term returns, investing in large cap equity funds is also regarded as a secure investment.
Large cap funds with the highest three-year returns are IDBI India Top 100 Equity Growth Direct Plan, Canara Robeco Bluechip Equity Fund and Nippon India Large Cap Bonus Growth.
Factors to Consider Before Investing in the Best Lumpsum Mutual Fund Investment
Investing A Significant Amount Of Money
If you prefer to invest in lump sum amounts, you can invest a substantial quantity in mutual funds. As a result, as the market expands, so does the value of the investment.
This Is The Best Long-term Investment Option
If you can save a lump sum of money for a longer length of time, say five years or more, investing in mutual funds is a better alternative; moreover, if you can hold it for a decade, the rewards will be significant.
Investing your lump-sum cash in mutual funds when market conditions are at their lowest but show signs of progress and future growth is known as the best time to make the most money as an investor; however, lump-sum investments in mutual funds should be avoided if the market is excelling and maximising as you may find yourself in a losing situation.
Benefits Of Lumpsum Mutual Fund Investments
- A one-time or lump sum investment is more convenient. An investor invests once, and in subsequent years, they do not need to worry about instalment deadlines or monthly savings to invest.
- These schemes are suitable for financial objectives with a horizon of at least 10 years.
- Mutual fund investments are made in the underlying assets. Long-term, these investments yield a greater return. The earlier an investment is made, the greater the return at maturity will be.
Disadvantages of Lumpsum Investing in Mutual Fund
- The investing of a lump sum does not provide an individual with investment discipline. Once a sum has been invested, the investor may calm down, notwithstanding the possibility of keeping some money and reserving them for regular investments.
- Due to the one-time nature of the transaction, an investor may not be able to capitalise on market swings. With consistent investments, an investor may mitigate the market’s fluctuations.
- When a lump sum is invested, the money is locked for the specified lock-in time. In the event of an emergency, an investor may be left with no or limited choices for managing money or terminating a loan.
A lump sum amount is a huge quantity of money that should be invested carefully in the finest lump sum investment fund; mutual funds are an excellent alternative. However, it is advised to avoid investing a lump sum in an Equity Mutual Fund without completing extensive research, as the time of your investment has a considerable influence on the results due to the fluctuating price of stocks.
Nonetheless, each person has a unique thought process, taste, time horizon, risk tolerance, investing objective, and objective. Therefore, it is not rational nor acceptable to suggest a single Mutual Fund for lump-sum investments that would be suitable for everyone. Consequently, the above-mentioned best lump sum mutual funds are all excellent possibilities for investors and should be evaluated and compared in order to make an educated decision by picking the appropriate Mutual Fund based on one’s needs and objectives. Consequently, the best lump sum mutual fund for you in 2022 would be the one that matches your profile.
Keeping in mind your Investment Objective, Time Horizon, and Risk Tolerance, do not forget to analyse the following considerations prior to selecting the best mutual fund for lump sum investment in 2022:
Fund Performance, Net Asset Value, Expense Ratio / Management Expense, Exit Load, Asset Management Company (AMC) Track Record, Assets Under Management (AUM) of the scheme, and Fund Manager’s expertise.