What is Lump Sum Payment?
10 May, 2024
Synopsis
A lump sum payment is one of the two ways to invest in Mutual Funds – the other is SIP, which allows you to invest in instalments.
A lumpsum investment involves investing a substantial amount of money in a single transaction.
You can easily invest lump sum amounts in Mutual Funds via HDFC Bank’s PayZapp app.
Mutual Funds continue to remain one of the most popular investment instruments for investors. Available in different shapes, sizes, and types, Mutual Funds allow you to hedge your risks since they comprise both, equity and debt elements. You can typically invest in Mutual Funds in two ways –Systematic Investment Plans (SIPs) and lump sum payments. Understanding both the methods of investing in Mutual Funds is important so you can compare the differences and make informed investment decisions. Read on to learn more about the meaning of lump sum payments and see how you can easily invest directly in Mutual Funds via HDFC Bank’s PayZapp.
Lump Sum Payment in Mutual Funds
Lump payment, as the name suggests, involves investing a significant sum of money in Mutual Funds in a single transaction. This approach is often favoured if you have a large sum of money available for investment or if you want to take advantage of a lucrative market opportunity and earn decent profits in a shorter time span.
One of the key benefits of lump sum investments is the potential to earn higher returns over the long term. Since the entire amount is invested upfront, you, as an investor, can benefit from compounding returns over a longer period. Additionally, lump sum investments are often associated with lower transaction costs, since the entry and exit load is charged only when you invest or redeem your Mutual Fund investment. As for SIP, you have to bear the entry/exit load with each SIP investment/redemption.
How Lump Sum Payments Differ from SIP
Unlike lump sum investments, SIP is an investment method wherein you must invest a fixed amount of money at regular intervals, usually on a monthly or quarterly basis. This approach is ideal for people who wish to invest money regularly but don’t have a significant capital amount to invest a lump sum amount upfront. SIP investments are also ideal for people who wish to ingrain or cultivate a disciplined and systematic investment approach.
One of the key advantages of SIP is its ability to mitigate the risk of market timing. Since investments are made at regular intervals, you can benefit from the principle of rupee cost averaging. This means that when prices are high, fewer units are purchased, and when prices are low, more units are purchased, thereby reducing the overall average cost per unit. By investing smaller amounts regularly, you can gradually build your investment portfolio over time.
Advantages of Opting for Lumpsum Payments over SIP
Let’s now see how lump sum payments compare to SIP investments.
Investing in lump sum is easier since it entails a one-time investment after which you just need to sit back and watch as your money grows.
Every time you invest or redeem each SIP, you must pay an entry and exit load and other mandatory administrative charges, which eat into your profits. In comparison, you only need to bear these costs once with lump sum investments, thus reducing your expense ratio.
When you invest a lump sum amount, you do so with the intention of generating profits over a longer term, giving your funds sufficient time to adjust to the changing market trends. This allows you to reap the expected results.
When you suddenly experience a cash crunch and need funds urgently, your lump sum investments give you access to a significant amount of money.
Making Lump sum Payments via PayZapp
HDFC Bank’s PayZapp allows you to make lump sum investments conveniently and securely. It offers a range of features, including the ability to invest in Mutual Funds seamlessly. Here’s how you can invest:
Download PayZapp Online Payment App, register on the app by linking your bank cards and UPI Accounts and log in to the app.
Go to ‘Bills & Recharges’ > ‘Financial Services,’ > ‘Mutual Funds.’
Choose your preferred Mutual Fund and enter the Unique Registration Number linked to it.
Select your preferred payment mode from the various bank cards and UPI accounts linked to PayZapp at the time of registration.
Review the payment details and complete the payment process.
Note: You need to register for the Mutual Fund investment on the website of the Asset Management Company (AMN) to get the Unique Registration Number. The AMC typically sends you these details on your email address once you are registered successfully.
Click here to make upi payment through PayZapp on your IOS phone.
Click here to download PayZapp Payment App for credit card bill payments on your Android phone
Invest in Mutual Funds Conveniently Via PayZapp
Whether you wish to set up an SIP or make a lump sum payment, you can conveniently invest in Mutual Funds on PayZapp. You can find a range of Mutual Fund scripts currently listed on PayZapp. Additionally, you can track your investments through the Passbook section on PayZapp. PayZapp is an excellent tool to manage all your investments and payments on one platform.
Use PayZapp to easily invest in Mutual Funds. Download the app today!
*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
