A one-time investment plan includes a lump sum amount to be invested by an individual in a financial instrument in one single payment rather than making periodic payments. These plans are best suited for investors with high-risk tolerance using a single one-go payment. One can use these plans to invest in financial products, such as stocks, mutual funds, bonds, insurance plans, fixed deposits, etc.
A One-time investment plan acts like an effective tool to achieve both short-term & long-term objectives.Whether you want faster returns by investing funds in a Short Term Investment Plan or want to create wealth over a long period of time, you have to choose the right kind of strategy to achieve financial success.ย
Best 5 One-Time Investment Plans Available In India
Listed below are the features of the best 5 one-time investment plans available here in India:
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Unit Linked Insurance Plans
- These investment plans are market-linked, providing life coverage & tax benefits.
- They are less risky in comparison to equity.
- It allows switching between the funds in case of a one-time investment option.
- It allows a partial withdrawal option facility.
- It provides many different options, including debt & equity.
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- Get a tax deduction on the amount invested under section 80C of the Income Tax Act, 1961.
- The maturity amount is exempt from tax under section 10(10D) of the Income Tax Act, 1961.
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Equity Funds
- These investment plans are market-linked, providing high returns& tax benefits.
- They attract lesser risk when funds are invested directly in equity shares.
- Experienced professionals manage these equity funds.
- Get diversification of your fundโs portfolio.
- Get a tax deduction under section 80C of the Income Tax Act, 1961.
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Debt Funds
- They are less risky in comparison to equity & hybrid funds.
- These funds offer higher returns.
- Under this plan, short-term capital gains attract higher taxes in comparison to long-term capital gains.
- A lesser tax is charged on the return amount when the funds invested are withdrawn before a period of 3 years, considering them a short-term capital gain.
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Liquid Funds
- These are the best suitable plans in case funds are to be invested for a period of 1 year or less, providing high liquidity.
- They are less risky when funds are invested in debt assets that are high-rated having a shorter tenure.
- Provides stabilised returns as the funds are invested in low-risk debt funds.
- It has a low expense ratio, i.e. lower cost of funds investment.
- It allows funds to be switched from liquid funds to some other funds.
- If the funds are invested for more than 3 years, they attractlong-term capital gain taxation.
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Fixed Deposits
- They provide guaranteed returns, hence offering a safe principal amount.
- It does not allow withdrawal before its due date. If the same is done, the penalty charges will be imposed.
- The interest amount remains constant, hence keeping the return amount to be constant.
- Higher interest rate is offered to senior citizens.
- Banks allow auto-renewal of the deposit amount along with the interest.
Factors Affecting One-Time Plan Decision Making
Provided are some of the factors that affect the decision-making of One Time Investment Plan:
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Gather Information
Conduct research by checking out books, getting help online, or consulting a financial advisor to get an understanding of the investment decision. Also, an individual should check out the trend pattern or past performances of the funds.
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Choose the plan wisely
One should invest in a plan after conducting proper research, i.e. the plan should be chosen in an appropriate manner.
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Patience
One should maintain patience once the funds are invested & not create a panic situation in case of market fluctuations. This is because the business cycle will obviously take some time to perform. Hence, the funds should not be invested in one-time plans if you want immediate results.ย
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Estimate Returns& tenure
Decide well in advance which funds are to be chosen, i.e. long-term or short-term investment plan.ย
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Make your funds grow
Funds lying in your bank accounts are like a dead fish; you should intelligently invest them in one of the best one-time investment plans to reap the best returns.
Advantages of One-Time Investment Plans
Provided are some of the benefits of one-time investment plans:
- Irrespective of keeping funds idle in banks or investing in accounts with lower returns, one should invest funds in one-time investment plans.
- It offers hassle-free investments, as one is not required to take stress to remember the investment dates or delay the dates of the premium.
- It helps to align the returns with your financial objectives, such as children’s higher education, children’s marriage, buying property, etc.
- Due to their compounding feature, they offer higher returns.
- It attracts lower amount of fees.
- Some of the plans, like ULIPs & ELSS, offer tax benefits, while some other lump sum plans also offer indexation benefits, attracting lower tax rates.
Disadvantages of One-Time Investment Plans
Provided are some of the drawbacks of one-time investment plans:
- There is no discipline involved as the premium is paid in a lump sum, i.e. one-go.
- They may attract lower amounts of returns that could have been more if invested in diversified funds.
- An individual may end up in losses due to improper knowledge of market fluctuations. This means he might end up buying funds with higher prices at the time of investment & may witness a decrease in prices later on due to market fluctuations, resulting in losses.
- This plan does not offer any flexibility in investment & withdrawal of funds.
- These plans do not offer liquidity of funds when required.
Conclusion
Choosing the right one-time investment plan involves a consistent analysis of factors like risk appetite, financial objectives, & investment horizon.By getting a consultation from a financial advisor or with the diversification of funds, an individual can mitigate the risks & optimise the returns.ย
