What is a one-time investment plan?

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. As an investor, if one has a substantial amount of money with higher risk tolerance, they can invest in a one-time investment plan.

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How does a one-time investment plan work?

A one-time investment plan lets you invest a single lump sum amount in a financial product. Once you have invested, the money remains in the plan without requiring any additional contributions.

Unit Linked Insurance Plans (ULIPs), mutual funds, endowment policies and fixed deposits are some of the best one-time investment plans in India. These plans can potentially help you grow your wealth over time with a single investment.

What are the advantages of a one-time investment?

• Capital appreciation: Profits from capital market investments depend on market performance. The stock prices can go up or down in the short term. With recurrent premiums, the sum you put in later does not get the time to adjust to the market conditions. But in long run, gains often cancel out the losses. Hence, a one-time investment allows your wealth to grow.
• Low charges: With multistage investments, you have to pay the associated transaction charges every time you invest. But with a one-time payment, you need to pay the fees only once. Hence, a one-time investment involves a lower cost.
• Better returns in the long run: Long-term investments gain from compounding. The dividends earn further interests year after year.
  With multiple premiums, the sums paid later remain invested for shorter durations. But in a one-time investment, the full amount remains invested for the entire term. Hence, there are better returns in the long run.
• Convenience of investing: You need not worry about arranging for future premiums or forgetting due dates. You pay the entire premium when the policy starts. Thus, there is no chance of the policy lapsing due to missed payments.
• Tax benefits: One time investment plans like the Equity-Linked Savings Scheme (ELSS) and the Unit-Linked Insurance Plan (ULIP) offer tax benefits under Section 80C^{^^} of the Income Tax Act, 1961. You can claim a deduction of up to ₹ 1.5 lakh per annum for your investments made into such plans.

What factors affect the decision to make a one-time investment?

• Existing market conditions: Assessing the market conditions can help you identify the right moment for a one-time investment. For this, you can track the Price to Earnings (P/E) ratio of a broad market index like NIFTY for the past four quarters. A P/E closer to 14 indicates better chances of earning profits.
• Return potentials: Look into the past performances of the funds you plan to invest in and study the projected returns. It will help you determine whether the estimated returns match your expectations.
• Liquidity: You should evaluate your financial circumstances and the scope for easy availability of funds while considering a one-time investment.
• Patience: In the long term, patience pays off in investing. You are more likely to see better returns if you remain calm and stay invested.
• Investment duration: Market volatilities even out over time. Thus, a longer investment horizon allows you to play with equities having higher return-potential. However, if your financial goals have a shorter time-span, you can consider investing in debt and balanced fund types.

What are some of the best one-time investment plans available in India?

Below are what could be considered among some of the best one-time investment plans with high returns that are available in India:

Unit-Linked Insurance Plan (ULIP)

A ULIP is a blend of an insurance and an investment plan. You can invest in it to prepare for future goals like retirement, a child’s education, house ownership and more. It also offers a life cover^# that protects the financial interests of your family after you. A ULIP can be used as a one-time investment plan or for recurring investment as per your needs.

Fixed Deposits

A fixed deposit is a type of term deposit offered by banks, post offices as well as non-banking financial companies. You can open a fixed deposit with a one-time investment for a fixed term. At maturity, you receive the sum of the invested capital as well as the accrued interest.

National Pension Scheme

The National Pension Scheme (NPS) is a government-backed retirement saving scheme that allows you to invest your money in a mix of equity, debt and alternative assets. You can make a lump sum, one-time investment in NPS annually. The NPS matures when you turn 60 years.

Equity Funds

Equity funds can be used as a one-time investment plan. These are a type of mutual funds that primarily invest in equity and equity-related securities. You can invest in it in a one-time, lump sum instalment and stay invested in the fund for as long as you prefer. The invested capital earns returns depending on the performance of the fund in the market.

Public Provident Fund

Public Provident Fund (PPF) is another government-backed savings plan. You can make a one-time lump sum investment in a PPF, with a minimum of ₹ 500 and a maximum limit of ₹ 1.5 lakh for each financial year. The account matures 15 years after you open it.

Sukanya Samriddhi Yojana

Sukanya Samriddhi Yojana (SSY) is a savings scheme that can be used by you for your girl child. You can make a one-time investment in SSY, with the flexibility to invest any amount between ₹ 250 and ₹ 1.5 lakh in a financial year.

Gold assets

Gold is a precious metal that provides a hedge against inflation and market volatility. You can invest in gold in a number of ways, such as buying jewellery, coins and bars, or consider investing in mutual funds that invest in gold.

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Who should consider a one-time investment plan?

The following people can consider investing in a one-time investment plan:

Salaried professionals

Salaried individuals can use annual bonuses or other types of income to invest in a one-time plan. These plans are simple to manage and do not require regular monitoring. At the same time, they may offer long-term wealth creation.

Risk-averse investors

Investors who prefer lower risk can choose one-time investment plans with safer options like endowment policies or fixed deposits. They can further time the investment strategically to reduce potential risks.

Non-Resident Indians (NRIs)

NRIs may find it difficult to manage recurring payments from abroad. A one-time investment plan can allow them to invest a lump sum. This can greatly simplify investment management.

Individuals nearing retirement

People nearing retirement can invest a lump sum in a one-time investment plan to preserve wealth, earn steady returns or secure guaranteed maturity benefits. These plans can also help set up a regular income stream for the future with minimal effort.

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Thus, if you wish to grow your wealth, go for a one-time investment plan.

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