Top 9 Upcoming Dividend Paying Stocks in...
The upcoming dividend stocks will be mentioned in this post, along with other crucial dividend-related concepts.
15 Jun, 2021
8 min read
1963 Views
The term lump sum has become more relevant because of the rise of SIP investment or Systematic Investment Plans for mutual funds.
Before SIP came along and became popular, most investments were made as a lump sum but nobody ever referred to it as a lump sum because there was no other mode of investment out there.
You can compare this to how today people might say “Hey, I’m not yet vaccinated.” There is context to say this now – it would make little or no sense back in 2019. Nobody was vaccinated back then. But because people are getting vaccinated now, there is context to allow for a person to say he or she is not vaccinated.
When you invest as a lump sum, you put down the entire chunk of capital that you intend to invest in one go. The opposite method is to go for an SIP where you invest a fixed amount of capital at fixed regular intervals in a fixed mutual fund. Lump sum investment is seen in both traditional investment types like gold, real estate, fixed deposits and is also seen in mutual funds. SIP however, is exclusive to mutual funds.
When should you invest in a lump sum?
1. When you have a large chunk of capital in hand
Let’s say you have just received your annual bonus or an inheritance? Or perhaps one of your other investments has matured? It makes sense to put this money to work in a mutual fund right away. It does not make sense to lose out on potential earnings while your capital is tied up in your savings account. The idea of going the SIP way is to average out the cost of the mutual fund units, which fluctuate on a daily basis. However, even if you pay a potentially higher price for your units, there is a good chance that it will work out better than letting your capital earn a low amount of interest in your savings account.
2. When you are unlikely to ever put aside the monthly savings for an SIP
Perhaps you’re the kind of person who cannot commit to saving every month. You have managed to put aside some capital over the last few months but cannot make any such commitment. Or perhaps your earnings situation is uncertain. In such a case, it might make sense to opt for lump sum investment.
3. When you’re late to make your tax-saving investments
If it is already February and you haven’t yet made your 80C investments for the financial year that will end on the 31st of March, you might not have time in-hand for an SIP (though some mutual funds do allow for weekly SIP). In such a case you can opt for your tax-saving mutual funds via lump sum investment. These tax-saving mutual funds are known as Equity Linked Saving Schemes – they lock-in your capital for 3 years and give you up to Rs 150,000 tax benefit under section 80C of the Income Tax Act. You may usually invest as either SIP or lump sum, but if you’re late to invest, you should go with lump sum investment to make the tax deadline.
Key considerations when investing a lump sum
1. Getting the most bang for your buck
We mentioned earlier that the idea of going the SIP way is to average out the cost of the mutual fund units, which fluctuate on a daily basis. That is because, when you invest in a mutual fund, you buy units of the said mutual fund. So let’s say you have Rs 10,000 to invest. You will receive how many ever units are possible within that amount. Let’s say the price of XYZ’s mutual fund’s units is Rs 50; you will get 200 units with your Rs 10,000 investment capital. However, unit prices vary on a daily basis and your earnings are determined by the price difference between when versus when you redeem or sell your units.
Clearly, you’re looking to maintain as big a difference as possible and therefore buying at as low a rate as possible is imperative. Investors try to average out their buy in by using the SIP method. When you go with lump sum, you lose out on that averaging potential. However, you can combat this in two ways
I By doing a little homework on the historical pricing of the units and buying when the market is down.
II By putting your capital in a Liquid fund that is typically less volatile and then having a Systematic Transfer Plan enable your buy-in to a mutual fund with a higher risk-reward ratio.
2. Uncertainty
In the current context, before tying up all your funds it makes sense to be sure that you have kept aside sufficient capital for your daily expenses and lifestyle upkeep. You do not want to have to redeem your investment at an inopportune moment because that could potentially mean losses (if you happen to need to withdraw your capital at a time when the market is low). Risk in mutual funds typically plateaus out in the long term and therefore, your investment horizon too, needs to be long term. Additionally, some types of mutual funds also come with lock-in periods.
Whether you choose to go with lump sum investment or SIP investment, remember to be careful with researching the fund house, the stocks that the mutual fund invests in and to check whether your risk appetite and the fund house’s risk profile match one another’s. Mutual funds may be low risk or high risk, but being stock market linked, there will always be some degree of risk. However, their popularity comes from their risk-reward benefit. Chosen right, mutual funds have the ability to deliver sizable earnings.
Always remember, anyone can invest irrespective of age, gender or occupation. Start your investment journey with Angel Broking – not only do you get an easy investment platform, but also tons of investor education literature like this post that you’re reading right now. Happy investing!
How would you rate this blog?
Related Blogs
Translate the power of knowledge into action. Open Free* Demat Account
Latest Blog
-
27 Jun, 2021
8 min read
The buy-and-never-sell type of investor
Broadly, there are two types of participants in the stock market – long-term investors and traders.
-
08 Nov, 2021
7 min read
Paytm IPO
Paytm is one of the biggest fintech platforms in India today, and is one of the latest IPOs in the Indian market. Read on to know more about the Payt…
-
08 Nov, 2021
8 min read
Upcoming IPO in Nov-2021
A number of companies have gone public this year and have successfully launched their IPOs in the market. Read on to find out more about the upcoming…
-
20 Jul, 2021
8 min read
What is CMP in the Stock Market?
In previous times, the stock market was a physical space that traders set up offices and desks at, and stocks, shares and bonds were traded in physic…
-
26 Mar, 2021
8 min read
A closer look at the Blue Economic Policy
You might have heard about the Blue Economic Policy in the news. Have you been wondering what it is all about, and what the implications will be for …
-
31 Jul, 2021
9 min read
Should you invest in the Paytm IPO?
The Paytm IPO has been making headlines for over a month now, so you have undoubtedly heard about it too.
-
28 Jun, 2021
8 min read
Upcoming Healthcare Industry IPOs in 2021
All eyes are on the healthcare sector. Not just expectantly waiting for it to save the world for Covid-19, but also as an investment avenue.
-
14 May, 2021
9 min read
Exploring the Telecom Sector as an...
Investing and trading on the Indian stock markets has the potential to bring in large returns.
-
14 Jun, 2021
8 min read
All you need to know about SIP
Everyone has heard of SIP by now because it has become quite a commonly quoted term – even if it isn’t always used correctly.
-
03 Oct, 2021
7 min read
IPO Advantages and Disadvantages
An initial public offering (IPO) is the process through which a company goes public by selling its stock to retail and institutional investors. Looki…
-
25 Jul, 2021
12 min read
All About Commodity Market In India
Commodity markets are platforms that enable trading, buying and selling of commodities such as raw materials or primary products.
-
05 Aug, 2022
5 min read
What is a Terminal Value?
If you’ve ever asked yourself “what is terminal value?”, you’ve come to the right place. Understand its definition, scope, and the forms it takes.
-
26 Jun, 2021
9 min read
Warren Buffett's Portfolio 2021: Top 5...
When it comes to investing, the seasoned trader and the novice alike look up to the holy grail of investors - Warren Buffett.
-
30 Nov, 2021
8 min read
10 Ways to Profit in a Bear Market
A bear market need not be the worst thing if you have a couple of tricks up your sleeve. Here are a bunch of strategies that call for varying levels …
-
29 May, 2022
5 min read
Why Elon Musk Bought Twitter: Impact on Investors
Understand what the implications of Elon Musk’s Twitter purchase are.
-
07 May, 2021
8 min read
Shadow investing - how reliable is it?
If your tyre went bust on the roadside, and you had all the material to repair your tyre, but no idea about how to do it, what would you do?
-
29 Apr, 2022
7 min read
Top 10 Stocks for 2022
Understand what some of the good stocks for 2022 are and learn where you ought to direct your money.
-
21 Aug, 2021
8 min read
Margin Trade Funding (MTF)
Those seeking to invest in the stock market have the opportunity to take advantage of a wide range of financial tools with which they can potentially…
-
11 Nov, 2021
8 min read
Is Google a Good Investment?
Some analysts feel that Google is a relatively secure stock to buy both qualitatively and quantitatively. The soundness of Google's balance sheet con…
-
02 Jun, 2021
8 min read
Crypto, The Volatility Hook, FOMO, and...
The democratization of the internet and access to world news has been a game-changer in how people choose to invest their money.
-
19 Mar, 2021
8 min read
Lessons on financial planning from IPL Auctions
Cricket and finance - sounds like polar opposites given the history of betting on each and every move that cricket fanatics in India track on their s…
-
11 May, 2021
7 min read
The most expensive shares in India
The stock market has something to offer for everyone who is looking to invest. Some stocks can cost you a few hundred rupees, while others might be s…
-
29 Mar, 2021
7 min read
ESG Funds: The numbers behind the new...
Over the last few years, investing through funds has gained considerable popularity, and investors across the globe are looking to give their savings…
-
05 Jul, 2022
5 min read
Earnings Before Interest and Taxes (EBTA)
It's difficult to assess your company's financial health. There are a lot of numbers to think about, and they don't always add up. Accountants and fi…
-
13 May, 2022
5 min read
Why Gold Rate is Increasing Day by Day?
There are a number of factors contributing to the rising price of gold. This article seeks to shed light on the same.
-
29 Jun, 2022
5 min read
Top 5 Best Trading Technical Indicators
Understanding the fundamentals of technical trading indicators may be quite beneficial if you monitor stock market activity on a regular basis. One m…
-
10 Jun, 2021
10 min read
Tax Exemptions in India: Simplified
The Income Tax Act, 1961 provides numerous exemptions to taxpayers under sections 80C to 80U of the Act.
-
08 Oct, 2021
7 min read
Exploring top Retirement Savings Strategies
Saving for retirement is a smart financial strategy for anyone, whether they are 25 or 55. Here are the best strategies for retirement savings that w…
-
30 Jun, 2021
9 min read
Things to know before Investing in any IPO
IPOs are exciting to stock market investors in the same way that a big-ticket film release is exciting to the general population.
-
10 Mar, 2022
7 min read
Russia vs Ukraine War: Impact On Indian...
The markets have reacted adversely to the Russia vs Ukraine war. Understand how the Indian stock market has been impacted.
-
08 Mar, 2021
8 min read
Raghuram Rajan's polarizing stance on Bitcoin
Bitcoin has been in news ever since its inception around the global financial crisis of 2008, but this year, bitcoin hasn’t only been in news.
-
10 May, 2021
8 min read
How do IPOs help economic recovery?
IPOs are an exciting investment opportunity for experienced and amateur investors and also a key ingredient in the cocktail that it takes to enable e…
-
23 Jan, 2023
None min read
Know About Hindsight Bias
Want to know a secret mistake that all of us make but do not realise? Hindsight bias is a folly that makes people waste their money, time and effort …
-
01 Feb, 2022
6 min read
Top 5 IPOs of 2021
Here's a rundown of the top IPOs in 2021. Continue reading to know more about it!.
-
09 Jul, 2022
5 min read
Benefits of Holding Stocks for Long Term
Understand the boons associated with long-term investments such that you too can consider availing them.
-
18 Feb, 2022
7 min read
LIC IPO: Benefits for Policyholders
All policyholders must ensure that their PAN data are updated in their policy records in order to be regarded as an eligible policyholder for the nex…
-
28 Jan, 2022
7 min read
Long-Term Investments
Confused about what is meant by long term investments, under assets on a company’s balance sheet? Here’s all you need to know about this component of…
-
18 Feb, 2022
6 min read
LIC IPO Details: Should You Subscribe or Not?
The public offering, according to the LIC DRHP (Draft Red Herring Prospectus), is entirely an offer for sale, with the government selling a 5 percent…
-
29 Jul, 2022
5 min read
Buy and Sell Strategy
Understand the merits associated with the “buy low, sell high” adage and determine whether or not it is actually easy to implement this buy and sell …
-
03 Aug, 2022
7 min read
How To Diversify Your Portfolio
Understand how to diversify your portfolio and the benefits associated with this diversification.
-
14 Aug, 2022
7 min read
What is Back Stop?
Backstop refers to the last type of support provided for unsubscribed shares or securities offered in the sale of unsubscribed shares in the stock an…
-
03 Dec, 2021
7 min read
IRCTC Stock and Share Split
A beginner investor's guide to stock split, the headline-making IRCTC stock split and its dramatic stock price spike and dip.
-
17 Mar, 2022
6 min read
Preference Shares: Meaning, Types and Advantages
This article helps shed light on all that preferred stock entails including its definition, types, advantages and disadvantages.
-
01 Aug, 2021
9 min read
Why companies are choosing the IPO route
You're hearing about all of these upcoming IPOs from brands that you know of and probably also use - Zomato, where you place your food orders; Paytm …
-
29 May, 2021
8 min read
Over-diversification of your portfolio is...
One of the foremost pieces of risk-management advice given to a stock market investor is: diversify your portfolio.
-
25 Oct, 2021
6 min read
Blue Chips Fuel Record
Blue-chip firms are noted for weathering economic downturns and operating financially in the face of adversity, which contributes to their long track…
-
12 May, 2021
7 min read
What is the endgame for the...
With vaccinations in full swing despite the onset of the COVID pandemic, Indian stock markets seem to be taking a rather relaxed approach to COVID 2.…
-
27 Mar, 2021
7 min read
Twitter as a market forecasting tool
Most of us use one or more social media platforms in today's digital age. Remember the days when Facebook came into existence, and how everyone was f…
-
05 May, 2021
7 min read
Understanding the impact of COVID 2.0 on...
When the COVID pandemic struck India last year, Sensex plunged from the 45,000+ levels right to sub-30,000 levels within a matter of five weeks.
-
16 May, 2021
7 min read
Is it Possible to Identify Moat Stocks?...
The impregnability of a fortress is defined by the effectiveness of its battlements, moats, barbican, towers, turrets and portcullis.
-
29 Jun, 2021
9 min read
How to make money in the Stock Market in 2021?
The idea of investing is to enable your capital to grow. In fact, capital growth is in the very definition of the verb “to invest”.
-
16 Jun, 2021
8 min read
All you need to know about term insurance
Insurance is one of the oldest forms of investment that exists on the investment landscape and as such you have definitely heard about it.
-
29 Dec, 2021
5 min read
Stocks to Watch: Reliance Industries,...
Reliance Industries Share Price: A subsidiary of the Indian conglomerate Reliance Industries Limited, Reliance Industries Limited works in the refin…
-
03 Jul, 2022
5 min read
Invest in Inflation: 5 Ways to Invest...
Understand inflation’s meaning and what assets to invest in that are protected against it.
-
31 May, 2021
8 min read
A throwback to the biggest rises and...
There are countless proverbs that are employed to offer caution and comfort to stock market investors: This includes “what goes up, must come down” …
-
05 Jan, 2022
8 min read
5 Stocks to Watch Out for Amid the...
Keep a watch on these stocks once the new Omicron version appears. Read on to know more!
-
11 May, 2022
8 min read
Top 7 Types of Investment Strategies in 2022
Take a look at the investment strategies provided below such that you can grow your wealth in 2022.
-
13 Feb, 2023
None min read
Warren Buffett's Investment Portfolio:...
Explore Warren Buffett's portfolio and learn how he became the world's sixth richest person. Follow his buy-and-hold investment strategy and discover…
-
18 Feb, 2022
7 min read
LIC IPO: Expected Date, Price, DRHP
The mammoth LIC IPO might be valued at about Rs 15 trillion. Here's all you need to know about the LIC initial public offering.
-
27 Oct, 2021
7 min read
Investors Walk Away from ViacomCBS Stock
Shares of ViacomCBS Inc. have been in the news recently for all reasons. It can be helpful for investors to understand what’s happening with this sto…
-
13 May, 2021
9 min read
What EV stocks are available and should...
EV stocks or stocks related to electric vehicles (hence the acronym EV) becoming increasingly popular as the world becomes more conscious of its carb…
-
09 Mar, 2022
8 min read
Understanding Different Types of Stocks
This article makes clear the varied forms of stocks available in the stock markets today.
-
28 Mar, 2021
7 min read
Fund of Funds: Should these be in your portfolio
Imagine that you wanted to install a new switch board in your room when the work from home craze started after the lockdowns.
Ready To Trade? Start with
Subscribe to #SmartSauda Newsletter
CONTINUE WITH GOOGLE
CONTINUE WITH FACEBOOK
