Investing a lump sum amount is no piece of cake. Even though receiving that amount is nothing less than a celebration. Your stars are shining bright with the sudden inflow of cash and now you are wondering how you should go about investing a lump sum amount. This windfall could be a result of sale of an old property, long-term maturity of fixed deposit, insurance claim or annuity received from bonds. You could go all Gatsby and indulge in parties, travel and blow it off. Or you could be sensible about the earning, consult your certified financial investor to map the best investment options for your lump sum cash.

So What Is A Lump Sum Amount? 

Whether you are a NRI or resident Indian, a lump sum amount refers to a chunk of cash. This could be a surplus equivalent to three months of your expenses or more. You have received this amount all at one go, and are now exploring options to invest it all unlike your periodic savings calendar. You can choose to invest it in your home country or your current country of residence.

To make investment of lump sum cash easier, we’ve narrowed a few easy ways to go about it.

1. What’s My Goal? 

Goals are your wants that go beyond your everyday needs. Before you hit the goal, check if there is any debt you need to aggressively pay off. Any important financial goals you need to accomplish right away. Depending on your location, your interests and preferences, start with defining your immediate needs, short-term goals and long-term goals. Knowing your expectations, you can align your investment strategies to meet respective goals.

2. Smart Goals, Smart Measures

Write your Specific, measurable, achievable, relevant and time-bound goals you wish to achieve. It’s equally important to devise smart measures to grow your money. At this point you may want to consider hiring a competent, certified and trusted financial planner to work with you. 

3. Which Way Should I Head? 

Having a financial planner (shoulder) to rely on, in your home country is like having a 2am friend on speed dial. They are available to answer, hear you and help you out in times of need and otherwise. Once you’ve decided where you want to go, planning your route and if needed re-routes is key to a successful journey. 

Are you looking to benefit anytime between 1-5 years? Then plan for short-term goals and pit stops you need to invest accordingly.

If you have bigger dreams, goals for which you will need money anytime after 5 years, you are in for the long-term.

4.  Investment Options For Short Term Goals 

For an investment of this nature, your aim is to have your money growing and within your reach. Even though investing lump sum is riskier, given all money is invested in at one go, below options make for good choices.

A. Short-Term Debt Funds 

            These are low-risk, capital safe investment funds and are ideal for risk averse NRI’s. From treasury bills that mature within 3 years to deposits and bonds with investment subjective maturity periods. You can explore this option, if safety and short-term investment growth are on your investment priority list.

B. Digital Gold

A classic choice and great way to grow your money, invest in gold without having to undergo the liability of storing it. At the end of maturity period, you will need to cash in your gold and account for gold making, delivery and thereafter storage charges. 

 C. Bank Fixed Deposits 

India offers lucrative interest rates on deposits and one of the highest worldwide. Even though the current scenario has seen a dip in the interest payout, this investment option provides capital security and flexibility to choose your investment tenure.

5.  Investment Options For Long Term Goals 

If you are planning to return to India in the long-run or wish to invest keeping children’s wedding, retirement or any other commitment in mind, below listed high risk, high return and long-term instruments make for great options.

A. Real-Estate 

Returning to India for your golden years is a dream for many NRI. If you wish to secure your lump sum amount, build a property for your future, investing in real estate is a great idea. This not only parks your money, you can even choose to rent it to amass additional income. A financial planner can help you with all your queries, best real estate options and how to manage it hassle-free.

B. Equity / Hybrid Funds 

Equity and hybrid mutual funds diversify your investment portfolio and can land you on an average 15-20% returns. These returns are subject to economic conditions and market volatility. 

C. Stock Market 

You can choose to directly invest in stocks. Having a financial planner guide you with short term and long term stock planning and management will let you enjoy the gains minus the operational hustle. Additionally they will also guide you with the taxation guidelines, filing and necessary banking details you will need to know.

D. Systematic Transfer Plan

Systematic transfer plan is the perfect way to invest your lump sum without having to risk the whole windfall at one go. Through this investment instrument, even though you park your money in one place, it is invested periodically in funds to minimize risk yet compound gains. Moreover, the STP provides flexibility to withdraw cash when in need at a charge and be disciplined and consistent with your fund investments.

To make investment easy, understand the banking necessities, NRI account, NRO or FCNR account, to get taxation indices, chart a roadmap – consult your financial planner to best understand how to invest your lump sum amount.