One Time Investment Plans - Benefits, Plans list and How to Select Best Investment Plan

One Time Investment Plans - Overview

Investing in a one-time investment plan is very feasible and better than a recurring deposit or an SIP. However, there are a lot of government schemas and investment options to choose from, making it a bit confusing. So, we have come up with a list of the best one-time investment plans in India.

What are One-time Investment Plans?

One-time investment plans are best investment plans that allow investors to make a lump sum investment instead of periodic, recurring investments. Such investment plans require investing a significant sum of money to generate high returns. Hence, allowing investors to grow their wealth without having to stress about it.

There is a range of investment plans that one can choose from depending on their financial goals and risk appetite. A good investment plan includes a diverse portfolio of investments including mutual funds, FDs, and more.

Top 10 One-time Investment Plans in India

There are a lot of options when it comes to the best one-time investment plans in India. One can choose a plan for their daughter’s education, retirement, or other financial goals. So, here we will share about the top 10 one-time investment plans in India:

1.) Unit Linked Insurance Plans (ULIPs)

Unit Linked Insurance Plans, popularly known as ULIPs, are the type of investment option that offers the benefits of market-linked investments and life insurance. Such funds invest a large portion of your investment into the stock market while the rest goes into your life insurance. These are low-risk plans as compared to equity funds. 

One can switch from one fund to another during the investment tenure. In addition, there is a range of equity and debt funds to invest in. If you wish to partially withdraw your amount, it’s possible with a ULIP plan. Investors also get an addition of tax benefits. 

2.) Mutual Funds

A Mutual Fund (MF) is an investment platform that funds money from investors and invests it in different financial securities such as bonds, stocks, shares, money market instruments, gold, etc. All of this process is done by investment professionals who allocate these investments to generate capital gains for the investors. 

Mutual funds can be very beneficial to investors as they are highly liquid, have a high return on investments, and provide tax benefits. There are three types of mutual funds: Equity, Debt, and Hybrid MFs. Check the Best Mutual fund to invest in 2024 which is best suitable for you.

• Equity Funds

These funds invest the majority of their assets in the stock market. Hence, they are also known as stock funds. Based on the market capitalization, equity funds can be termed as Large Cap fund, Mid Cap Fund, and Small Cap Fund. One can expect high returns from equity funds in the long run, however, the funds could turn out to be highly risky in the short term as markets fluctuate.

Top 5 Equity Funds to Invest In 2024

• Debt Funds

Debt funds, also known as fixed-income funds or bond funds, invest in fixed income instruments such as corporate and government bonds. In simple words, one can offer a loan in exchange for interest. They have a pre-defined maturity period and interest rate. The returns are not affected by market fluctuations and thus, they’re considered to be safe. 

• Hybrid Funds

These funds maintain a balance between growth and income by investing in both equity and debt funds. Each type of hybrid fund invests a different ratio of equity and debt funds. Hybrid funds are considered to be riskier than debt funds but safer than equity funds. So, people with a moderate risk tolerance can choose them. 

3.) Liquid Funds

Liquid Funds are a great option for those looking forward to a short-term investment for up to 1 year or less. Hence, liquid funds are one of the best investment plans for 1 year. These funds offer stable returns while keeping your money at a minimal risk. In addition, they have a low expense ratio and thus, investors can save their costs. 

If you wish to shift from liquid funds, you can do so effortlessly whenever needed. When you’ve invested in liquid funds for over 3 years, these are then qualified for Long-Term Capital Gains (LTCG) tax benefits. Moreover, these are one of the safest mutual fund categories which means, there is minimal to no risk at all on your investments. 

Let’s understand this better with a real-life example. Over the past 3 years, PGIM India Liquid Fund showed 4.75% annualized returns and 5.35% in the past 5 years. This highlights the fund’s efficiency in keeping up with its peers.

4.) Opt for SWP Plans in Mutual Funds

An SWP plan in mutual funds, also known as a systematic withdrawal plan, allows you to redeem your mutual fund investments in periodic installments.  With an SWP plan, you can create your cash flow as per your needs. In addition, you can set if you’d like to withdraw only the capital gains or a set amount.

By utilizing the best SWP plan for yourself, you can create a steady flow of income for yourself while staying invested in mutual funds. These are best suitable for investors seeking a monthly income. A well-planned SWP could potentially act as a pension plan. 

Let’s understand starting an SWP with an example: Suppose that you’ve invested in an equity mutual fund whose current value is ₹20L. To gain monthly returns, you’ll have to submit an SWP application. Considering your investment is worth ₹20L, you can opt for ₹20,000 per month for 100 months. 

| Aditya Birla Investment Plans: A Comprehensive Guide

5.) Bank Fixed Deposits

A bank fixed deposit, also known as a time deposit or fixed deposit, is a popular savings scheme offered by public and private banks and non-banking financial companies. For an FD, one is required to invest a lump sum amount for a fixed interest rate for a fixed period. Once the investment tenure is completed, the investor gets the maturity amount. 

However, if you wish to withdraw the premature amount, you must pay the penalty and accept a lesser rate of interest. The interest rate on an FD is usually higher than that of a savings account, depending on your bank. You can invest for a duration as short as 7 days to as long as 10 years. FDs are also very flexible and low-risk investments. 

6.) Post Office Fixed Deposit

Post Office Fixed Deposit is another popular savings program, offered by the Indian Postal Institute. The interest rates of this scheme are determined by the Ministry of Finance every quarter. It is a short-term investment option, with tenure options ranging from 1 year to 5 years. One can start with a minimum deposit of ₹1,000. 

Additionally, depositors with a tenure of more than one year can reinvest their interest. The interest can also be redirected to a 5-year recurring deposit program. Also, in case the investor does not withdraw the amount at maturity, it will get reinvested at the new interest rate for the initial term deposit. 

Latest Bank FD's Interest Rates (w.e.f January 2023)

7.) 5-Year Tax-Saving Fixed Deposits

In a 5-year tax-saving fixed deposit, one can save income tax by opening the account. Such deposits gain from tax deductions under Section 80C of the Income Tax Act, of 1961. These 5-year tax-saving FDs have a 5-year lock-in period. So, this could be the best investment plan for 5 years.

The minimum amount to be deposited is ₹100 and in the multiples of ₹100. Meanwhile, the maximum limit of money to be deposited in an FY is ₹1.5L. These FDs can be booked with monthly and quarterly payout. Considering the eligibility, Hindu Undivided Families and Resident Individuals can invest in this scheme.

8.) Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a post office savings scheme which is launched by the National Savings Institute and backed by the Indian Government. Therefore, the scheme offers guaranteed returns to the customers. 

The interest payment for PPF is due annually on March 31. However, the interest is calculated on the minimum PPF balance between the 5th and 31st of each month. This scheme has a 15-year lock-in period, which you can extend for 5 more years. 

Now, coming to the benefits that PPF offers. Investors can avail the loan facility against their PPF investments between the years three and five. In addition, the investments, returns, and maturity amounts are tax-free. 

So, how much do you have to invest to start a PPF account? A minimum investment of ₹500 is required every year. If not maintained, your account will be deleted and you will have to pay a penalty to recover it. While the minimum investment required is ₹500, the maximum limit is ₹1.5L.

9.) Bonds

Bonds are a type of fixed-income securities that represent a loan from an investor to an issuer. The issuer is usually the government or a big corporation. Bonds work similar to how regular bank loans work. However, in this case, the issuer promises periodic interest payments and the total face value of the bond to be paid at maturity. 

Bonds are relatively less risky than stocks which makes them great for conservative portfolios. In addition, they offer stable returns most of the time. However, their yield could be affected by the interest rate fluctuation and the issuer’s credibility. 

• NHAI bonds

10.) Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs) are trusts that own and operate income-generating real estate properties. These trusts offer investors a method with which they can invest in properties of their choice without having to directly purchase or manage them. 

REITs often use this pooled capital to invest in other diversified range of real estate assets. In return for the investment, investors can own a fraction of these properties, and get regular income through rent distributions. Additionally, they can gain through potential capital appreciation and enhanced liquidity.

| Real Estate Mutual Funds

11.) Government Savings Bonds

Government Savings Bonds are one of the safe investment options that are backed by the Government of India. On average, they offer an interest rate of 7.75% which means, one can expect a steady income by investing in these bonds. 

Hindu Undivided Families and resident individuals can invest in these savings bonds. One can start investing at a minimum deposit of ₹1,000 with no upper limit. There are two interest payout options, cumulative and non-cumulative. Although you get the whole principal amount at maturity, the interest shall be taxable. 

12.) Peer-to-Peer Lending

Peer-to-peer lending, also known as P2P lending, is a process that allows the borrowers to connect directly to the lenders, without having a middleman or financial institution. This type of loan is also known as “social lending” or “crowd lending”. 

To invest in peer-to-peer lending, the investor needs to open an account on one of the P2P lending websites. Then the investor has to deposit a sum of money to be dispersed in loans. Then the money transfer and interest rates will be handled by the site entirely. Moreover, all the monthly payments will also be handled by the platform.

In any way, you must note that these platforms are still risky and one must consider their creditworthiness before making any deposit. Although their interest rates and fees are high, these platforms may not be worth the risk as well.

13.) Gold Assets

Gold investments can be made by purchasing gold assets such as jewelry, coins, gold bars, gold funds, or gold exchange-traded funds (ETFs). One benefit of owning gold assets is that it can help you beat inflation and high liquidity. Nowadays, the most convenient way to invest in gold assets is through Gold funds and Gold ETFs. 

Let’s understand Gold ETFs first. Gold ETFs are similar to buying physical gold, however, you don’t purchase physical gold. Instead, you buy gold in paper [Demat] format, and hence, you don’t have to deal with the hassle of storing physical gold. The gold price in the market directly affects the value of gold ETFs. 

On the other hand, Gold Funds are the type of investment that is made in billions and the companies involved with gold mining. All the purchase is made in the form of paperwork, similar to a gold ETF. However, the gold price does not affect the value of a gold fund.

14.) Sukanya Samriddhi Yojana (SSY)

Sukanya Samriddhi Yojana (SSY) is a savings scheme for girls by the Government of India. Parents or guardians of a girl child with a minimum age of 10 and maximum age of 14 can open an account in the girl’s name. In this scheme, a minimum amount of ₹250 per year is mandatory to be deposited. 

The account remains active until the girl turns 21. Partial withdrawals can be made at maturity or premature withdrawals are subject to certain penalties. The government offers a high interest rate which is revised at times. All the amount at maturity is tax-free. The Sukanya Samriddhi Yojana is one of the best one-time investment plans for the girl child. Moreover, guardians with a boy child can opt for a one-time investment plan for the boy child.

15.) National Pension Scheme (NPS)

The National Pension Scheme (NPS) is a pension scheme initiated by the Central Government of India for the working population. All the employees in the public, private, and unorganized sectors can avail the benefits of this scheme. 

Any Indian citizen can opt for the NPS during their working life. After one’s retirement, they can withdraw a portion of their savings while the rest of the money stays invested in an annuity. Moreover, the investor starts to receive a regular pension from the invested amount. NPS also offers tax benefits of up to ₹1.5L. 

The National Pension Scheme has the following two types of accounts:

1. NPS Tier-1 Account

It is the basic NPS account that has a Permanent Retirement Account Number (PRAN). This account will remain active until you reach the age of 60 and so, your money stays locked until you retire. In addition, you can extend your investment period till the age of 70. 

At maturity, you can withdraw 60% of the amount as a lump sum amount and the rest should be used to buy an annuity. Note that the income from the annuity shall be taxable.

1. NPS Tier-2 Account

It is an optional account which can be opened only when you already own the basic, Tier-1 account. The minimum deposit required for this account is ₹1,000. Other additional contributions must be at least ₹250. The good part about this account is that it has no lock-in period and hence, you can withdraw funds anytime. 

Advantages of One-Time Investment Plans

One-time investment plans come with a lot of advantages. Here are 6 of the top benefits of one-time investment plans:

• Capital Growth

Investing your money in a one-time investment plan with good returns grows it, which is much better than keeping it idle or investing in low-return schemes. 

• Alignment with Financial Goals

The best one-time investment plans for you give sufficient returns as per your financial returns. Hence, you can benefit from the returns at maturity as they meet your financial goals’ timeline. 

• Compounded Returns

Lump sum investments often provide higher returns than usual investments due to the power of compounding. So, starting early could be even beneficial in the long-term. 

• Low Transaction Charges

Lump sum payments are often associated with low transaction charges and thus, one-time investment plans are convenient. 

• Tax Benefits

One-time investment plans such as ELSS and ULIPs offer tax benefits to the investors. Meanwhile, other types of plans offer indexation benefits that attract lower taxes. 

• Hassle-Free Investments

Investors don’t need to stress over their investment dates or delay their premium payments for a later period with a one-time investment plan. 

Disadvantages of One-Time Investment Plans

While every investment has its benefits, they have several disadvantages as well. Here, we will discuss the disadvantages of one-time investment plans:

• Losses in Market Fluctuations

The market is very unpredictable so, the investor might purchase higher units of the one-time investment plan during high prices and later witness a drop. What gets worse is that no alternatives are available to purchase units in the middle of your investment tenure. 

• Risk of Low-Returns Investment Plans

The investment plan could end up attracting low returns. To avoid such cases, one should diversify their investment portfolio.

• No Discipline

There is no discipline in one-time investment as you pay in a single check or whenever the lump sum money is available. 

• No Flexibility

You cannot invest and withdraw your investment as per market speculations in one-time investment plans and hence, there’s no flexibility. 

• No Liquidity of Funds

If you need your funds urgently, one-time investment plans are not the best option to liquify your funds.

FAQs

1. How to invest Rs. 10,000 at a one-time?

You can choose one of the following best one-time investment plans and invest into them:

• Equity-based Mutual Funds
• Debt-based Mutual Funds
• Liquid Funds
• Fixed Deposits (FDs)
• Gold Assets
• Government Schemes

2. PPF vs SIP: Which is better?

The choice of investing between a PPF (Public Provident Fund) and a SIP (Systematic Investment Plan) depends strongly on your financial goals, investment horizon, and risk appetite. 

For instance, you should go ahead with PPF for a safe, long-term investment with guaranteed returns. On the other hand, an SIP is better suited for someone with a higher risk appetite and higher returns for a long-term investment. 

3. Is a one-time investment better than SIP?

A one-time investment or a SIP could be potentially beneficial for you depending on the investment horizon, your risk tolerance, and your investment goals.

For example, investing a lump sum amount in mutual funds could be beneficial if you have a high risk tolerance and you want to take advantage of potential gains. However, an SIP could be more beneficial for people with a low-risk tolerance since it’s less likely to be impacted by market volatility. 

4. Can I invest only one time?

Not really. Most of the one-time investment plans provide an option to invest in a lump sum amount or small installments. For a one-time payment, you can choose to invest a lump-sum amount. On the other hand, small installments can be paid on a monthly, quarterly, half-yearly, or yearly basis. 

5. What is the best one-time investment?

ELSS and ULIPs are considered to be the best one-time investment plans with high returns and tax benefits. However, here are some other best investment plans:

• Debt Funds
• Fixed Deposits
• PPF
• Gold Assets
• Liquid Funds