A lump sum investment is a method of investing wherein large amount of money is invested at one go. Lump-sum investment is a popular way of investing in mutual funds. Lump-sum investing is a common mode of investment for HNIs and big-ticket investors or you may consider lump-sum investment at the events such as an inheritance, bonus, or a gift. It is a wonderful tool to invest the amounts received at retirement to generate a steady income flow. The lumpsum investment can be done in any scheme of mutual fund after analysing your risk appetite. You must still invest based on your investment goals, risk appetite, and time horizon.

For investors who are informed about the market cycles, identifying a market low and investing a lumpsum amount in a mutual fund at the right time can garner high returns. This is because at the lower levels of market the cost of mutual fund units is lowered and it gives higher returns when the market recovers.

However, an ill-timed investment could result in losses. This is because an investor whose lumpsum is showing loss may not invest in more money at the lower levels. Thus, one has to be very cautious while investing in lumpsum.