The phrase lumpsum includes a complete payment of entire sum of money in one go. In financial terms, lumpsum investment is the payment of substantial money which is invested in one go rather than breaking down the sum into several, regular instalments.  In essence, lumpsum investment is the opposite of SIP investment or Systematic Investment Plan.

An investor can invest in mutual funds via lumpsum basis their risk appetite, investment tenure, nature of cash flows, and financial objectives. There are several benefits of lumpsum investment. This article will focus on the same. Read on to know more.

Benefits of lumpsum investment

Here are some benefits of investing in mutual funds via lumpsum investment:

1. Long term tenure
   Lumpsum is ideal mode of investment for those investors who wish to invest for a long duration, say 10 years or more. However, it must be noted that if you are planning to invest in debt funds, a medium-term investment horizon is also preferred.
2. Substantial amount
   Lumpsum investment allows investors to invest their significant, extra surplus of cash. As a result, when the markets grow, then the value of the investment values is also expected to grow to a large extent when compared to investment in mutual funds via SIP mode of investment.
3. Convenience
   Lumpsum investment is ideal for those individuals who have a forgetful nature, thus failing to plan things in a systematic matter. Hence, if you are one such investor, then lumpsum mode of investment is ideal mode of investment for you.
4. Timing the market
   It is always recommended to have a look out on when you enter the markets, specially if you are investing for a long-term. Lumpsum investments show best results when an investor enters the market during a slump or when the markets show huge potential for growth. During such periods, one can choose to invest a substantial amount in the markets and earn significant gains as opposed to SIP mode of investment. However, one must be wart that if they end up investing when the markets are at peak, they might incur significant losses.
5. No investment commitments
   Unlike SIP mode of investment, lumpsum investment does not demand future investment commitments from investors. This mode of investment is ideal for those investors who are self-employed or non-salaried individuals who have a irregular flow of cash.
6. Better control

Investing in mutual funds via lumpsum investment provides investors with better control over their mutual fund investments and make the most of the market corrections.

So, if you have a substantial amount of money at your disposal, you might consider making a lumpsum investment. Whether you choose between SIP or lumpsum depends on your liquidity condition, financial goals, risk profile, investment horizon, etc. Lumpsum investment can be ideal for those investors who are experienced and have the requisite knowledge and understanding about the workings of the market. You can use a lumpsum calculator to understand the future value of your investments. Happy investing!