What is a lump sum in a mutual fund?

When you invest in a mutual fund in a lump sum, it means one , bulk amount locked into a one-time mutual fund investment. this is often as opposed to spreading it out over time, like in SIP (Systematic Investment Plans).
Lump-sum investments in mutual funds are usually preferred by prominent players and investors who particularly rely on company stock appreciation for capital creation. For an investor with a sizeable investment amount and a high-risk capacity, a lump sum mutual fund investment is often a decent opportunity.
For example, you get an unexpectedly large bonus one year. After setting aside money for all of your preplanned commitments and investments, you still have Rs.75,000 left to invest. you choose to take a risk with this amount because it’s in excess and you’ve got no specific plans for an equivalent. you’ll invest the whole amount in a single mutual fund scheme of your choice. this might be different from investing Rs.6,250 monthly for a year.

Features of a lump sum investment

Market volatility

If you invest a large amount of money in one place, your investment could take a hit when markets dip. However, the key’s to carry on to the investment over a longer period.


Minimum investment

Since lump sum means a single investment, the minimum amount that almost all mutual funds require is Rs.5,000. However, after the initial lump sum investment,usually you’ll make subsequent investments in multiples of Rs.1,000 within the same scheme.

Time horizon

You can hold a lump sum equity mutual fund investment for a longer time duration. Financial experts suggest a minimum of three years. If your goal is for short-term appreciation, you’ll consider putting it in a debt fund or liquid fund.


Mutual Fund Investment Calculator

Mutual Fund Investment Calculator


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