Investment Tips: Want to invest ₹1,00,000 for 5 years, invest it in NSC, or make a lumpsum investment in MF, know here...

NSC vs Mutual Funds Lumpsum: If you have a lump sum amount and want to invest it somewhere, then you have many options other than bank FD. NSC is one of them. The National Savings Certificate is a government scheme in which you can deposit money for 5 years. Currently, it is getting interest at the rate of 7.7 percent. After 5 years, you will get your money back along with interest. But if you dare to take a little risk on your investment, then you can also invest that amount in Mutual Funds.

Money can also be invested in Mutual Funds through a lump sum. However, interest cannot be guaranteed in Mutual Funds like NSC or any other government scheme because this scheme is market-linked. However, experts believe that it gives an average return of 12 percent. Here, know how much benefit you will get if you invest Rs 1 lakh in NSC or Lumpsum.

How much benefit is NSC?

If you invest Rs 1 lakh in National Savings Certificate (NSC), then at the rate of 7.7 percent, you will get Rs 44,903 as interest for 5 years. In this way, you will get Rs 1,44,903 on maturity. You will get the interest rate for 5 years as per the date on which you buy the NSC certificate. Meanwhile, if the interest rates are increased or reduced by the government, then it does not affect your NSC account.

How much benefit is Lumpsum?

If you invest Rs 1 lakh in mutual funds through lumpsum, then at the rate of 12 percent estimated return, you will get Rs 76,234 as interest. In this way, you will get a total of Rs 1,76,234 in 5 years, which is much better than NSC. But keep in mind that NSC is a market-linked scheme, so its return can be more or less according to the market.

If this return is 10% instead of 12%, then you will get Rs 1,61,051 in 5 years, Rs 1,53,862 at a 9% interest rate, and Rs 1,46,933 at an 8% interest rate. On the other hand, if you get a return of more than 12%, i.e., about 15%, then the amount will more than double in 5 years. In this way, you will get Rs 2,01,136 at 15% interest. If seen in this way, you are expected to get more profit in a lump sum.

Also, understand this thing related to Mutual Funds Lumpsum.

The advantage of investing lump sum money in Mutual Funds through lump sum is that you can invest according to the market situation and take advantage of its fluctuations. In Lumpsum, you do not need to invest on a fixed date every month like SIP, whenever you have lump sum money, you can invest it in mutual funds.

However, financial experts believe that money should be invested in lumpsum only when you have a large capital and you have a good understanding of the market. A small mistake in this can also cause you loss. If you are a new investor and you want to get good returns by taking less risk in the market, then SIP can be the best option.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.