Best One-Time Investment Plans in India 2023 with High Returns
There are many investment options available for everyone to choose from. However, it depends on your future goals, investment returns and present-day requirements. Generally, people invest money to secure their future or fulfil their current financial obligations. Some people even seek monthly earnings in the form of an income from their investments to solve their short-term financial requirements.
On the other hand, a one-time investment is one in which an investor puts in a large sum of money in one go for a specified period in a particular scheme. This investment is mainly made to fulfil bigger life goals such as children’s education fees, retirement expenses, children’s marriages, etc. One-time investments are long-term investments, returns of which are generally received after a significant period of time in the future.
After carefully considering all its benefits and drawbacks, a one-time investment plan must be chosen. In the blog below, we have mentioned the best one-time investment plans in India for higher returns and how to select these plans. We will also learn about the benefits and drawbacks of a 1-time investment.
What are One Time Investment Plans?
One-Time Investment Plans are financial solutions where an investor makes a one-time, lump sum investment rather than regular instalments. These plans enable the cash to increase over a certain period. They are typically chosen by those who come into a significant amount of money and prefer to invest it right now. Depending on the product selected, the increase may come from dividends, interest payments, or capital gains.
Let’s take a look at some of it’s features as well:
Single Upfront Payment: Unlike regular savings or monthly plans like SIPs, you pay once at the start.
Varied Choices: You can pick from mutual funds, fixed deposits, or bonds.
Chances of Better Profits: Investing a big amount at once could give better profits in the long run.
Flexibility in Duration: You can decide how long you want to invest, whether for a short or long time.
Cost-Effective: Some of these investment options might be cheaper in terms of fees than others where you pay regularly.
Access to Funds: Some plans might have a period before you can take out money, while others allow earlier withdrawals with certain rules.
Tax Matters: Like other investments, these plans could affect your taxes when you put in money, while it’s growing, or when you take it out.
The Best One-Time Investment Options
Amongst the many options available, we have curated a list of five of the best one-time investment plans. The following plans will assist you in creating an investment portfolio based on market conditions and sound decision-making.
Liquid mutual funds offer a short-term investment horizon of up to 91 days. They are a suitable choice for those looking for a place to park their funds briefly before considering other investment opportunities.
One of the standout features of liquid funds is the tax advantage; after holding the investment for a specific period, the incurred tax is relatively low, resulting in notable savings. The risk associated with liquid funds is minimal due to their short-term nature, and the tax imposed upon maturity depends on the duration of the hold, generally staying on the lower side.
When thinking short-term and aiming for a consistent flow of income from a one-time investment, debt funds emerge as a favourable choice. The associated risk is low, primarily because these funds invest in relatively safe debt securities.
While the tax benefits of debt funds vary based on the holding period, the tax on the maturity value is determined by how long one keeps the investment.
These funds are tailored for investors with a long-term perspective. Given their substantial exposure to stocks, approximately 65% of the invested money is directed towards high-performing equities.
This high allocation means a potential for greater returns but also comes with increased risk. The tax benefits for equity funds depend on the holding duration, and the maturity amount will be subject to either long-term or short-term capital gain tax rules, depending on the investment period.
A blend of stock-like trading and the appeal of gold makes Gold ETFs a unique proposition. With the flexibility of short and long-term investment periods, they are a prime choice when predicting a rise in gold prices.
Although they don’t offer specific tax benefits, they come with a moderate level of risk, influenced by gold price volatility. Upon maturity, the investment will attract a capital gains tax.
Public Provident Fund (PPF)
A PPF is the embodiment of a long-standing savings solution with a standard tenure of 15 years, which can be extended further. Specially tailored for long-term savings objectives, contributions made to a PPF are tax-exempt under Section 80 C of the IT Act of 1961.
The minimal risk, being government-backed, is an additional advantage of PPF. What makes PPF especially enticing is its EEE (Exempt-Exempt-Exempt) status, ensuring that there’s no tax on the maturity amount.
Fixed Deposits (FD)
One of the most traditional forms of investments, Fixed Deposits provide a secure way to park your funds for a predetermined period, ranging from a few days to several years. The key appeal of FDs is the guarantee of returns, as the interest rate remains fixed throughout the tenure. This predictability comes with the comfort of low risk. While the interest earned on FDs is taxable as per the individual’s tax slab, the principal amount remains untouched by taxation. However, the tax on the maturity value will depend on the total interest accrued during the investment period.
Sukanya Samriddhi Yojana
Specifically designed as a one-time investment plan for a girl child, the Sukanya Samriddhi Yojana is an initiative to promote the welfare of the girl child in India. With a tenure of up to 21 years or until the girl gets married after turning 18, this scheme offers an attractive interest rate. One of its striking features is the tax benefit under Section 80C for the amount deposited, and the maturity amount is also tax-free. The risk is minimal, given its backing by the Government of India. It’s an ideal plan for parents to secure their daughter’s financial future.
National Pension Scheme (NPS)
As a long-term retirement-focused investment, the National Pension Scheme provides a mix of equity, fixed deposits, corporate bonds, liquid funds, and government funds. While its flexible nature allows for both lump-sum and regular contributions, the potential for higher returns comes with a moderate risk due to exposure to equities.
Up to a certain limit, investments in NPS offer tax deductions under Section 80C, 80CCD(1), and 80CCD(1B). However, it’s essential to note that the final corpus, when withdrawn at retirement, has a taxable portion.
The Importance of One-Time Investment Plans
The following points show the importance of a one-time lump-sum investment plan:
- One-time investment plans help the investor generate a steady flow of income through market returns.
- Apart from a handful of plans, one-time investments are generally considered low-risk and high-yield options, fit for people with a low-risk appetite.
- Long-term goals and needs are catered better with the help of one-time investments. People of retirement age can benefit the most from such schemes. They can create an excellent corpus for their golden years by making a one-time investment.
- The financial market also flourishes with one-time investment plans. The flow of money in the market increases with different portfolios working towards steady growth.
- Pooling your money in a growth-oriented avenue will improve your chances of making future investments. In addition, the knowledge of the market you gain from risk-free investments can be used to invest in stocks and bonds in the future.
How Does a 1-time Investment Plan Work?
Let’s take a look at how a typical 1-Time Investment Plan works:
Initial Investment: The investor selects a certain financial instrument and makes a sizeable initial investment. Based on the investor’s financial resources and the minimal investment requirements established by the financial instrument, this can be any amount.
Investment Tenure: The money is invested for a set period, depending on the selected financial instrument. This can be anything from a few days (like with some liquid funds) to decades (like with some retirement or family-oriented plans).
Return Mechanism: The type of the financial product determines the return on the investment. It might have a fixed interest rate, as with fixed deposits, or it might have a variable interest rate, like equities mutual funds that are subject to market fluctuations.
Effect of Compounding: The force of compounding significantly influences many one-time investment programmes, particularly those with longer durations. Reinvesting the interest or return obtained can eventually result in exponential development.
Maturity or Withdrawal: The principal amount, along with the returns (accumulated interest, dividends, or capital gain), are repaid to the investor at the conclusion of the investment term or at the time of their decision to withdraw.
Tax Implications: The returns may have tax implications depending on the financial product. Some may offer tax-free returns, while others may be subject to taxation in accordance with the applicable tax legislation.
Benefits of One-Time Investment Plans
The following are the benefits of a one-time investment plan:
- Long-term returns are made possible with one-time investments. This way, the investor can reap benefits in the future and fulfil financial responsibilities quickly.
- Keeping a close eye on your money is possible through a one-time investment. In addition, the lack of recurring payments makes it easier for people to know exactly how much they will receive at the plan’s maturity.
- One-time investments are a lot easier and more peaceful compared to traditional investments. This makes the investor focus on other essential areas of their lives rather than worrying about regular payments.
- The earlier you start your investment journey, the better the results will be. So, while you are young, try and invest in a suitable one-time plan which will help you secure your coming years against financial burdens and uncertainties.
Disadvantages of One-Time Investment Plans
The following are the disadvantages of the best one-time investment plan:
- One of the cons of a one-time investment plan is the lack of investment discipline. In this way, you may spend all your savings on an instrument at once. It can lead to future financial strains, resulting in future financial crunches.
- A one-time investment does not suit all kinds of investment goals; people looking for short-term earnings through low-risk securities would not benefit a lot from one-time investments.
- One-time investments generate returns over a long period of time. Over this period, the market can fluctuate, and returns can diminish significantly. There is no way of knowing the performance of a stock or investment scheme over 15-20 years unless it is on a government-backed investment option.
- People do not associate one-time investments with high returns as they are generally low-risk and low-return schemes.
- The low popularity of one-time investments in youngsters is evident from the fact that people are still not preferring these plans for future gains.
Who Should Invest in One-Time Investment Plans?
Although investments don’t have to box individuals into certain categories, here’s a list of individuals who can be the ideal candidates to invest in a One-Time plan. Let’s take a look at them:
- Busy Professionals and Long-term Planners: Those with hectic schedules or clear long-term objectives might find one-time investments easy and beneficial.
- Strategic and New Investors: Suitable for both market-savvy individuals wanting to capitalize on market conditions and newcomers eager to start their investment journey.
- Risk-averse and Tax Planners: Perfect for those seeking stable returns or wanting to enjoy tax benefits from specific investment schemes.
- Parents of Girl Children: Instruments like the Sukanya Samriddhi Yojana offer focused one-time investment plans for the girl child’s future.
- Lump Sum Receivers: Ideal for those with a sudden influx of money like bonuses or inheritance.
What are the Eligibility Criteria for One Time Investment?
Here are the following eligibility criteria for One-Time Investment:
- Age & Specific Criteria: Typically, the investor needs to be 18, but some plans, like child-specific ones, have unique age or beneficiary requirements.
- Residency & Tax Status: Depending on the scheme, residents or specific taxpayers may be targeted.
- Income & Minimum Amount: A stable income source and meeting the minimum investment amount can be prerequisites.
- Documentation: This usually involves submitting government-issued ID cards and address proofs.
- Specialized Schemes: Plans like the Sukanya Samriddhi Yojana have particular conditions, like the beneficiary being a girl child.
What are the Documents Required?
- PAN Card
- Aadhaar Card
- Voter’s ID Card
- Driving License
- Aadhaar Card
- Voter’s ID Card
- Driving License
- Latest Utility Bills (like electricity or water bill)
- Rent Agreement or Property Deed
How to Invest in the One-Time Investment Plans?
- Select a Suitable Plan: Research different investment options, weighing factors like returns and risk.
- Seek Expert Advice: If uncertain, consult a financial advisor.
- Gather Documents: Have your identity and address proofs ready.
- Apply Online/Offline: Use the institution’s portal or visit their office to apply.
- Determine the Amount: Decide on the lump sum you wish to invest.
- Nominee and Payment: Fill in the nominee details (if needed) and make your payment via your preferred method.
- Confirmation: After payment, expect a receipt or digital confirmation.
- Periodic Review: Occasionally check on your investment’s performance.
Factors That Affect the Decision of One-Time Investment Plans
The following factors can affect the decision regarding one-time investment plans:
- Before diving into one-time investments, proper knowledge of the financial market is extremely necessary. A lack of understanding of market fluctuations and changes would possibly lead to hefty losses down the line.
- Return estimation is another factor that must be considered before starting a one-time investment plan. A one-time investment and high returns will only make sense if done to earn high earnings. Therefore, try to forecast your estimated returns beforehand. If you do not have a proper idea about how the market functions, seek advice from a professional.
- Do not make lump sum investments without familiarizing yourself with the terms and conditions of the plan. You may end up losing your capital if the company is not secure and safe to invest in.
- Lastly, an individual’s risk tolerance is crucial. Understanding how comfortable you are with potential market downturns or the chance of losing some or all of your initial investment is fundamental. This helps ensure you don’t opt for plans that might leave you anxious or stressed.
How Can You Exit from these Plans?
Deciding to exit a one-time investment plan isn’t simple. When considering whether to take back your money, either a portion or the full amount, before or after its due date, it’s crucial to be informed. It’s wise to think about your current finances and future needs. Talking to a financial advisor before making such a decision can be beneficial.
• Holding Duration: The majority of these investment schemes come with a specific holding duration, a time frame within which pulling out funds may result in penalties. This duration can differ based on the scheme and the entity offering it.
• Withdrawal Fees: Withdrawing funds before the end of the holding duration may attract certain fees, known as withdrawal or encashment charges. The magnitude of these fees can vary, and in some instances, can be considerable.
• Withdrawal Method: To retrieve your investment, you’ll typically need to present a completed and signed request for encashment to the investment firm. In the digital age, numerous firms facilitate online withdrawals, making the process more streamlined for investors.
• End of Term: When you opt to withdraw post the stipulated term, you are usually entitled to the benefits outlined in your investment agreement. This generally encompasses the principal amount coupled with the profits accrued over the term.
• Tax Considerations: Exiting a single-payment investment can have tax repercussions. While some gains might be exempted, others could be taxable. Engaging with a tax specialist or your financial institution can provide clarity on this aspect.
In conclusion, one-time investment plans can be your answer to financial woes if done correctly and after careful analysis. With the help of the investment mentioned above, make sure to make sound decisions keeping in mind your future requirements, financial state and investment goals.
For how long should I invest in a liquid fund of my choice?
Liquid funds have a maturity period of 91 days. Most people invest for the said period, receive their returns and move on to another plan. However, experts recommend three years as the ideal investment period for a one-time investment. A three-year period is enough to create a rewarding portfolio and help you get a grip on the market fluctuations.
Where do debt funds invest the invested money?
Under a debt fund, your investment would be further invested in debt securities. These may include government, corporate debt, and other money market instruments. The fund manager is responsible for making a rewarding portfolio for your investments to grow.
What is the main goal behind one-time equity fund investments?
Equity fund investments are mainly made to build an attractive portfolio as a one-time investment plan. This portfolio is created to contain high-yielding stocks that have high risk attached to them. Investors choose equity funds to diversify their existing portfolios with the addition of corporate stocks.
How much gold is one unit of an ETF worth?
One ETF unit is equal to 1 gram of gold. The gold in question is high-quality and has a purity certification of the highest order. The gold is generally more than 99% pure and is highly valuable in the market.
Is it possible to extend the duration of a Public Provident Fund?
The Public Provident Fund scheme has a maturity period of 15 years. This duration is suitable for people seeking long-term earnings every month. However, if you want to extend the term to suit your financial requirements, you can extend it by five more years.
What are the top one-time investment plans for a child?
The top one-time investment plans for a child include Sukanya Samriddhi Yojana, Child Mutual Funds, and Fixed Deposits.
How to invest Rs. 10000 in 1-time investment?
To invest Rs. 10,000 in a one-time investment, consider options like short-term mutual funds, fixed deposits, or direct equities.
Is SIP better than lump sum investments?
SIPs offer disciplined investing and dollar-cost averaging, while lump sum investments can harness potential market upturns; neither is categorically better-it depends on the investor’s strategy and risk tolerance.
How to check whether my 1 time investments are performing well or not?
To assess the performance of your one-time investments, compare their returns with relevant benchmarks or indices and evaluate them against your initial financial goals.