A one-time investment plan is a type of investment where a lump sum amount is invested in one go in a particular scheme for a specific duration.
Are you looking to maximise your financial potential by investing a significant sum all at once? If so, the one-time investment plan offers a variety of choices, enabling you to deploy your capital in a single transaction rather than spreading it out through regular payments.
This article will walk you through the different one-time investment plan options, their benefits, and the different options available in India to suit your financial goals.
What is a one-time investment plan?
A one-time investment plan enables you to invest a substantial lump sum in a single transaction into an asset of your choice. This could include options such as mutual funds, stocks, bonds, fixed deposits, or insurance policies. Unlike systematic investment plans, where contributions are spread over time, this approach is ideal for those with surplus funds looking to maximise returns. It provides the flexibility to capitalise on market opportunities and potentially earn higher profits. However, it also involves higher risk due to market fluctuations, making it crucial to assess your financial goals and risk tolerance before opting for this strategy.
When deciding where to invest, consider your financial objectives, risk tolerance, and investment horizon. Whether you're considering stocks for growth or bonds, for stable returns the key is to stick to a consistent strategy; invest your funds in one go and aim for long-term gains.
This approach is particularly advantageous for individuals with excess funds, who have a larger risk appetite and are keen on maximising their returns over a longer horizon.
How does a one-time investment plan work?
In a one-time investment plan, you pool all your money into an upfront investment instead of making periodic payments and spreading it out over time.
How it operates:
- Choosing an investment option: You have the flexibility to pick from choices such as mutual funds, stocks, or bonds. Each option comes with risks and potential returns to suit different financial goals and risk preferences.
- Making a lump sum investment: You invest a sum of money at once into the selected financial product in a single transaction. You can use a lump sum calculator here to plan your investment better.
- Potential for growth through compounding: The invested amount has the opportunity to grow over time due to compounding, where your investment returns generate returns. This can significantly boost the value of your investment.
For instance, you make a one-time investment of Rs. 500,000 in a mutual fund that yields an average 9% annual return rate. Then in five years, your initial investment could grow to around Rs. 769,312, thanks to the effects of compounding – reinvesting earnings to earn more.
One-time investment options in India
Here are the Top 10 one-time investment plan options in India that cater to a wide range of risk profiles, return potential, and time frames
Investment options |
Expected returns |
Risk level |
Direct Equity |
High |
High |
Mutual Funds |
Moderate to high |
Moderate |
Fixed Deposits |
Low to moderate |
Low |
Bonds |
Low to moderate |
Low |
National Savings Certificates |
Moderate |
Low |
Real Estate |
High |
Variable |
Gold |
Moderate |
Moderate |
ULIPs |
High |
High |
Public Provident Fund (PPF) |
Moderate |
Low |
Senior Citizens' Saving Scheme |
Moderate |
Low |
Top one-time investment plans: In-depth insights
One-time investment plans offer a convenient way to invest a lump sum amount with the potential for substantial returns over time. These plans can be beneficial for those who prefer not to make regular investments but have a significant amount of money to invest upfront. Here’s a detailed look at some of the top one-time investment options available:
1. Fixed Deposits (FDs)
Fixed Deposits are one of the safest investment options, offering guaranteed returns over a fixed period. Investors deposit a lump sum amount with a bank or financial institution for a predetermined tenure, and in return, they receive interest income at a fixed rate. The primary advantage of FDs is capital protection, though the returns are generally lower compared to market-linked investments. FDs also offer the flexibility of choosing between monthly or quarterly interest payouts.
2. Public Provident Fund (PPF)
The Public Provident Fund is a long-term savings scheme with tax benefits, backed by the government. It offers a fixed interest rate and a tenure of 15 years, which can be extended in blocks of 5 years. Investments in PPF qualify for tax deductions under Section 80C, and the interest earned is tax-free. PPF is suitable for conservative investors seeking a secure, long-term investment with attractive tax benefits.
3. National Pension System (NPS)
The National Pension System is a government-backed pension scheme that allows individuals to invest a lump sum amount towards retirement savings. It offers a mix of equity, corporate bonds, and government securities to maximise returns. NPS provides tax benefits under Section 80C and an additional deduction for NPS contributions. It also offers the flexibility to choose between various fund managers and investment options.
4. Mutual Funds
Mutual funds pool money from various investors to invest in a diversified portfolio of stocks, bonds, or other securities. One-time investments can be made in mutual funds through a lump sum payment. Equity mutual funds, debt mutual funds, and hybrid funds are some options, each catering to different risk appetites and investment goals. Mutual funds offer the potential for higher returns but come with market risks.
5. Gold ETFs
Gold Exchange-Traded Funds (ETFs) are investment funds that track the price of gold and are traded on stock exchanges. They offer a way to invest in gold without the hassle of physical storage. Gold ETFs are suitable for investors looking for a hedge against inflation and currency fluctuations. They offer liquidity, transparency, and the benefit of gold's historical performance as a safe-haven asset.
6. Real Estate
Investing in real estate involves purchasing property with the expectation of earning rental income or capital appreciation. A one-time investment in real estate can offer substantial returns, especially in high-growth areas. Real estate investments require significant capital and involve additional costs such as maintenance and property taxes. However, they offer the benefit of tangible assets and long-term value appreciation.
7. Government Bonds
Government bonds are fixed-income securities issued by the government to fund its activities. These bonds offer periodic interest payments and the return of the principal amount at maturity. Government bonds are considered low-risk investments and are suitable for conservative investors seeking stable income. They provide safety of capital and regular interest income, though returns may be lower compared to other investment options.
8. Corporate Fixed Deposits
Corporate Fixed Deposits are similar to bank FDs but are offered by companies. They usually offer higher interest rates compared to bank FDs, but they come with higher risk as they are not backed by government guarantees. Corporate FDs are suitable for investors willing to take on more risk for potentially higher returns. It's important to assess the credit rating and financial health of the issuing company before investing.
9. Systematic Investment Plans (SIPs) with Lump Sum
While SIPs are typically associated with regular investments, some mutual funds offer options for lump sum investments within the SIP framework. This approach allows investors to make a one-time investment and benefit from the disciplined investment approach of SIPs. It provides the flexibility to invest a large sum while still leveraging the benefits of systematic investing.
10. Unit Linked Insurance Plans (ULIPs)
Unit Linked Insurance Plans are a combination of insurance and investment. They offer life cover along with the opportunity to invest in a variety of funds, such as equity, debt, or balanced funds. A one-time investment in ULIPs can provide long-term benefits, including insurance coverage and potential wealth accumulation. ULIPs come with various charges and fees, so it's crucial to understand the policy terms and conditions before investing.
Features of one-time investment plan
The One Time Investment Plan (OTIP) is a popular investment option in India that allows investors to invest a lump sum amount in a single transaction. Here are some key features of OTIP:
- Lump sum investment: OTIP involves investing a single amount in a single transaction, which can be a one-time investment or a lump sum payment.
- Flexibility: Investors can choose from a variety of investment options, including stocks, bonds, mutual funds, and more.
- Tax benefits: OTIP investments are eligible for tax benefits under Section 80C of the Income Tax Act, 1961, subject to certain conditions.
- Risk management: OTIP investments can be managed by professional fund managers, reducing the risk associated with individual stock investments.
- Diversification: OTIP investments can be diversified across various asset classes, reducing the risk associated with individual investments.
- Convenience: OTIP investments can be made through various channels, including online platforms, mobile apps, and physical branches.
- Transparency: OTIP investments provide detailed information about the investment, including the investment amount, interest rate, and maturity period.
Benefits of one-time investment plans
- Gives immediate market exposure: Contrary to SIPs, one-time investment plans require you to make a lump sum deposit at the beginning. This gives your capital longer exposure to take better advantage of market upswings.
- Promotes simplified management: A one-time management plan does not require any ongoing contributions. This investment approach also eliminates the need to regularly time the market, thus reducing the stress and complexity associated with frequent decision-making.
- Increases cost-effectiveness: Making periodic contributions over months, years, or decades is bound to attract more transactional fees. In a one-time investment plan, the fees are more economical owing to fewer transactions.
- The power of compounding: When you invest a substantial amount in one go you instantly tap into market opportunities allowing your investment to benefit from compounding. This means your returns have the potential to grow exponentially over time surpassing the growth potential of systematic plans that involve smaller, periodic contributions.
Importance of one-time investment plans
One-time investment plans play a vital role in financial planning, especially for individuals with surplus funds. They allow investors to deploy a lump sum amount into various asset classes, such as mutual funds, stocks, or bonds, in a single transaction. This approach is ideal for those looking to capitalise on immediate market opportunities or seeking potentially higher returns over a specific period.
These plans offer the advantage of simplicity, as they eliminate the need for recurring contributions, making them hassle-free and efficient. They are particularly beneficial for long-term goals like retirement, higher education, or wealth creation. Moreover, they enable disciplined financial management, as the lump sum is invested rather than spent impulsively. However, the success of one-time investment plans depends on market conditions, the selected asset class, and the investor's risk tolerance. Proper research and professional guidance can help mitigate risks, ensuring the plan aligns with individual financial objectives.
Who needs a one-time investment plan?
A one-time investment plan in a mutual fund or any other asset class is ideal for the following people.
| Investor profile | Suitability reason |
| Lump-sum Recipients | Immediate investment of a large sum, such as an inheritance or bonus |
| Risk Tolerant Investors | Those comfortable with potentially high returns at higher risks |
| Long-term Financial Planners | Individuals planning for future needs like retirement or education |
| Seasoned Investors | Those with the experience to capitalise on market timing |
Choosing the best plan for one-time investment
Selecting the best one-time investment plan requires careful evaluation of your financial goals, investment horizon, and risk tolerance. Begin by assessing your objectives, whether they are long-term, like retirement, or short-term, like wealth preservation. Choose asset classes aligned with your goals—mutual funds for diversification, fixed deposits for security, or equities for high growth potential. Consider market conditions and the expertise of professional fund managers if investing in mutual funds. Diversification across different asset types reduces risks and optimises returns. Seeking advice from a financial expert can further ensure your one-time investment strategy aligns perfectly with your financial aspirations.
Mutual fund schemes for one time investment in 2024
- Quant Small Cap Fund
- Quant Infrastructure Fund
- Quant Mid Cap Fund
- Bank of India Small Cap Fund
- Quant ELSS Tax Saver Fund
- Nippon India Small Cap Fund
- Quant Flexi Cap Fund
- Canara Rob Small Cap Fund
- Quant Active Fund
- Invesco India Infrastructure Fund
Factors affecting the decision of a one-time investment plan
When considering a one-time investment for high returns various aspects come into play:
- Financial security: Having enough stability to handle any fluctuations in the market
- Investment timeframe: Longer periods usually align better with one-time investments
- Risk preference: Being comfortable with taking risks is conducive to a one-time investment plan
- Market situation: Timing entry into the market correctly can boost investment returns
Disadvantages of one-time investment plans
Despite the numerous benefits of this investment approach, there are a few drawbacks that investors need to consider:
- Market timing risk: Poor timing can lead to significant losses
- Less flexibility: Once invested, reallocating funds can be challenging.
- High initial requirement: Requires a substantial amount of capital upfront.
- Potential for higher losses: If a market declines soon after investment, it can lead to significant losses
Conclusion
A one-time investment plan can be a powerful tool for those with the right financial backing and risk appetite. It simplifies investing, potentially accelerates financial growth through compounding, and suits those with a clear, long-term financial trajectory.
However, it’s essential to weigh the potential disadvantages against personal financial circumstances and goals before proceeding.
Whether opting for a one-time investment plan in a mutual fund or initiating a SIP for a new mutual fund scheme, investors can utilise the Bajaj Finserv Mutual Funds Platform to pursue their financial goals confidently.
The convenient and easy-to-use Bajaj Finserv Mutual Funds Platform boasts over 1,000 schemes for easy comparison and selection. making it an excellent resource for both novice and experienced investors.
