Which Is The Best Lump-sum Investment For 3 Years?

Investing now occupies a significant portion of a person’s life. People are finding methods to make money even while they are sleeping. They can do this by investing in the correct financial security or uploading movies to the internet and garnering millions of views, providing both active and passive revenue. However, you must possess the necessary knowledge to put your eggs in the right basket if you want to generate passive income from investment.

What is Lump-Sum Investment?

A lump sum is when you invest large money all at once. When investors choose this strategy, a sizeable payment is paired with a single mutual fund investment, giving rise to the term lump sum mutual fund investment.

Making a lump sum investment in a mutual fund is a common practice. Investors with a sizable amount of cash are best suited for lump sum investments. Additionally, investors who want to commit a substantial sum of money to their investment use this method of investing.

For instance, you can use a significant percentage of your savings by making a lump sum investment in mutual funds.

Features of Lump-sum Investment

Without a Financial Commitment

Lump sum investments do not obligate investors to make more investments in the future. Therefore, this investment strategy may be advantageous for those without a fixed income.


SIPs require participants to make periodic investments at set intervals; lump sum investments do not. Therefore, making a one-time, lump-sum contribution might be a simple and hassle-free way to invest in mutual funds.

Power of compounding

Compounding is the process by which investors receive additional profits on top of their initial investment. Investing in a lump sum enables investors to take advantage of compounding.

Factors To Consider Before Investing In Lump Sum Investment

Investment Objective

Investors must decide what their investment goals are before making any investments. For instance, you can buy ELSS mutual funds, which have tax advantages, if you want to save money on taxes. Similarly, confirm that your mutual fund strategy aligns with your financial objectives.

Expense Ratio

The fees that fund companies charge investors to pay a mutual fund’s operational costs are known as expense ratios. It is essentially represented as a percentage and falls between 2.5% and 3%. It raises the total cost of investing because it is an additional cost that individuals must bear. Because of this, it’s crucial to investigate a scheme’s expense ratio before investing.

Risk-Return Evaluation

Considering expected returns and related dangers when investing in any mutual fund is essential. Debt funds typically give high returns and are viewed as less risky. Equity funds, on the other hand, have larger risks but produce higher returns. Therefore, based on the risk and returns of a fund, investors must choose it wisely.

Past Fund Performance

Investors must select a mutual fund after analysing its historical performance when making a lump-sum investment. Mutual fund plans that have consistently performed over time may be given higher preference in this situation. It is essential to keep in mind that past success does not guarantee future success. Therefore, it shouldn’t be used as a criterion for choosing a scheme.

How To Invest In Lump Sum Investment?

If you are considering making a one-time investment in mutual funds, you should first seek the advice of a financial counsellor. After that, you can select the mutual fund type of your choice and get in touch with its asset management organisation.

The verification process must then be finished, including filling out the KYC form and supplying the required paperwork to start the investment.


For seasoned investors with a high-risk tolerance and sizable investment amount, lump-sum mutual fund investments are the best option. However, if market turbulence and a decline in portfolio values make you uneasy, it would be prudent to reassess this course of action.


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