What are lump sum investments?
Investing money is important rather than letting it sit idle in your bank account. A lump sum investment means investing a large sum of money at one go instead of staggering it across a series of installments. A lump sum way of investing is opposite to a Systematic Investment Plan or SIP. Depending on your risk appetite, investment tenure and investment objective you can pick either a fixed income or equity fund. Lump sums can be considered when there is idle cash or windfall gains like a bonus, gifts, pension, sale of a business or property and if you have an irregular income.Lump sum investments do come with a few advantages especially when you buy at every dip the rupee-cost averaging falls to your advantage. If the markets have corrected and are at reasonably lower levels then lump sum investments seem very profitable because once they recover you could see superior returns on your investment as you are invested fully. Lump sum investments are generally convenient for investors who can relax without worrying about any further payment to be made in the future and want to spread their investments as soon as possible.