Investing in equity mutual funds is a great investment strategy to achieve long-term financial security. With the right mix of equity funds, you can enjoy substantial capital gains and create a balanced investment portfolio that meets your risk appetite. Depending on the amount you invest and the risk you want to take, various equity funds are available.
When investing in equity funds, you have the option to invest either a lump sum or through a Systematic Investment Plan (SIP). In lump sum investing, you make a one-time investment into the selected fund, whereas an SIP involves making regular contributions over time (monthly/ quarterly/ etc.). Read more on how to invest lumpsum in equity mutual funds and understand the numerous advantages of such an approach.
How to invest lumpsum in equity funds online?
You can invest in different types of equity funds via lump sum in two different ways.
Using fund houses’ online portals
With a mutual fund investment app
3 b enefits of investing a lump sum in equity mutual funds
One of the major benefits of a lump sum investment in equity funds is that it gives you the opportunity to time the market and get maximum returns on your investment. When you invest all your funds at once, you can decide when to buy stocks depending on whether they are undervalued or overvalued. This helps you make more informed decisions about when and which stocks to purchase, thereby potentially maximising your return on investment.
Investing a lump sum amount into an equity fund allows compounding to work its magic from the beginning. Compounding refers to earning interest or profits from investments over time; as such, it is one of the most powerful tools for building wealth over time. By investing your entire amount at once, you are allowing compounding to start benefiting your investments right away instead of waiting until additional sums are invested later on. As such, this method can often yield greater returns than if you had spread out your investments over different periods.
When investing large sums at once, there is less need for financial planning or budgeting as much as there would be if smaller amounts were being invested periodically since one large payment covers everything upfront. This also helps you avoid paying any recurring charges associated with smaller payments and makes investments easier and more cost-efficient overall.
With careful analysis of equity mutual funds, thorough research of fund houses, and an understanding of your risk appetite and financial goals, lump sum investing in equity mutual funds can be a worthwhile strategy.