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1 Lakh Investment Plan

Having a budget and investing in the right plans is a prudent way of wealth building. Good financial planning involves a balance between short-term and long-term products in alignment with your financial goals. While long-term investments are seen as products with potential for financial growth, short-term investments are equally good. They can yield good returns if the right 1 lakh investment plan is chosen.  

Long-term investments usually produce higher returns and allow you to outperform inflation. Prioritizing saving, investing, and retirement planning is critical for increasing your wealth and achieving your financial objectives. Choosing the correct pension plan might improve your benefits, particularly if you want to retire early. ...Read More

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1 Lakh Investment Plan

1 Lakh Investment Plan

1 Lakh Investment Plan
October 17, 2024

Table of Content

 

What is a Short-Term Investment Plan?

Short-term investment plans are for those who expect returns within periods between 6 months to 5 years. They are an avenue to create emergency funds or an option for financial goals that are due in the next 5 years. However, to protect the capital and earn moderate returns, you should conduct a risk assessment based on your risk tolerance and investment horizon before making a decision.

Short-term investment plans are important for the following reasons:

  • To avoid exiting from long-term investments in between during a financial emergency.
  • Having backup funds for emergencies.
  • To fulfill short-term financial goals.
  • Provides moderate returns.

Top Investment Options for 1 Lakh

After understanding how short-term investments are advantageous you should know the best investment plan for 1 lakh rupees options. Here are some of the options:

  • Recurring Deposit

A Recurring Deposit provided by banks and post offices is a secure 1 lakh investment plan. It provides the convenience of depositing a fixed amount with a flexible tenure between 6 months to 5 years. RD is the best investment plan for 1 lakh rupees for those seeking stable returns without exposure to market fluctuations. You can link your savings or current account to the recurring deposit account to ensure that the monthly contribution is made regularly. Recurring deposit is the best investment option for conservative investors who want to incorporate liquidy management, safety, and moderate returns into their financial planning. 

  • Fixed Deposit

Fixed is a popular 1 lakh investment plan among investors with low-risk appetite. It is a one time investment plan for a period ranging from 6 months to 10 years. You have the flexibility to choose the tenure that aligns with your financial goals. With an easy renewal and liquidity property, this is one of the best investment options for 1 lakh rupees. The capital grows steadily in a fixed deposit without the risk of market fluctuations. These deposits are the safest savings instruments with guaranteed returns. The rate of interest offered at the time of opening the deposit remains unchanged till maturity.

  • Money Market Account

Banks and credit unions offer money market accounts. It is a safe 1 lakh investment plan ideal for conservative risk-averse investors. The interest rates are higher than the savings accounts. The interest rates are floating and depend on market performance. The interest is compounded daily and paid monthly. This account is a safe short-term investment option with various convenient options like withdrawal without penalties, cheque writing, and debit card facilities. However, the number of transactions in MMA is limited which makes it less flexible than savings accounts.

  • Corporate Fixed Deposits

Corporate fixed deposits are term deposits offered by financial and Non-banking financial companies (NBFCS).  You can invest a fixed amount for a fixed period in these deposits. These deposits offer interest rates higher than traditional fixed deposits. For those who seek guaranteed returns, this deposit is an ideal 1 lakh investment plan.

Though the returns are higher in corporate fixed deposits, the risk involved is higher as they are not backed by insurance as in the case of bank deposits. It is therefore necessary to evaluate the company’s credit rating before making a decision. Investments in highly rated companies are safer but get lower returns than in low-rated companies. These deposits also offer the flexibility of interest payouts that provide the advantage of creating a regular income. However, investors should carefully study the risk-return profile to ensure the safety of their investment.

  • Mutual Funds

Mutual funds are a lucrative investment option that can be tailored according to your financial requirements. This is a perfect 1 lakh investment plan for small investors seeking high returns.  A choice of equity investments and debt funds that cater to various risk appetites is available. The right mutual fund selection is necessary to align the investments with your financial goals and risk tolerance. Regularly reviewing and reworking the investments according to changing market conditions is crucial to minimize losses. Investors can take the help of professional fund managers to manage their funds in the financial market.

  • Stock Market Investments

Stock market investments comprise buying shares and stocks for various companies listed on the stock exchange. It gives the investors ownership of the business. However, investing in equity funds needs expertise in market analysis and understanding. You need a long term investment perspective for investing in stocks is ideal as the prices can fluctuate significantly. Creating a diversified portfolio by investing in various companies can reduce the risk to some extent. Though stocks have the potential for higher returns through capital appreciation and dividends, the risk attached is also high.

Stock market investments are ideal for those who have the emotional and financial stability to weather the fluctuating market conditions.

Things to Keep in Mind While Investing 1 Lakh

Several investment options that can be customised to your financial goals and requirements are available in the market. Choosing a one lakh investment plan from a wide range can be a daunting task. The pointers given below help make an informed decision.

  • Evaluate your financial objectives to understand what you need from this investment.
  • Assess your risk tolerance i.e., how much loss you can sustain arising out of the fluctuating market conditions.
  • Have a diversified portfolio to balance the risk. If some funds do not perform well, the loss can be made with the others that are performing well. This exercise will reduce the risk and enhance the return on investment.
  • Liquidity management is another important factor in ensuring easy access during emergency financial needs.
  • Compare all the available plans. Understand the risk involved, the rate of interest offered, and the return on investment. Also, opting for a plan with tax benefits1 can be more beneficial.
  • Be aware of the premature closure terms and conditions.
  • Closely monitor the market trends and economic factors. They can affect your investment to a great extent.
  • If required, take the help of financial advisors and fund managers. Always take suggestions from them before making any investment decisions.

Conclusion

The decision to invest funds in a 1 lakh investment plan is an important one. Guidance from experts and information about market trends is crucial to safeguard your investment. An array of investment options are available in the market including recurring deposits, fixed deposits, corporate fixed deposits, mutual funds, stock market instruments, money market accounts, etc. The returns from some investments are high while the risk attached is also high. Some products provide stable returns with low risk but the outcome is comparatively lower. Proper capital allocation to balance the risk and the return on investment (ROI) in your portfolio is crucial. However, considering factors like your financial goals, risk tolerance, return on investment, tax benefits1, etc., can help you choose the right investment plan.

FAQs on 1 lakh Investment Plan

Q. Which is the best investment for 1 lakh?

The best investment for 1 lakh depends on your risk tolerance and financial goals. A fixed deposit can be the best 1 lakh investment plan for those looking for low-risk investments with stable returns and easy liquidity. The other options are mutual funds, stock market instruments, recurring deposits, money market accounts, and corporate deposits.

Q. How to double 1 lakh rupees?

You can double 1 lakh rupees with a diversified portfolio aligning with your risk appetite and time horizon. Individual stocks or equity mutual funds fetch high returns but the risk is high. The returns majorly depend on the performance. Generally, applying the rule of 72 gives you a fair idea as to in what time your investment will double i.e., divide 72 by the annual interest rate and you arrive at the number of years for your investment to double.

Q. What is the safest investment with the highest return in India?

The safest investment with the highest return in India is the Public Provident Fund (PPF). Typically, your investment will double in 10 years considering the existing interest rate on PPF i.e., 7.1% p.a. The other options are NPS, Debt Funds, etc.

Q. What are the expected returns on a 1 lakh investment over six months?

The returns from a 1 lakh investment plan in 6 months depend on the option chosen. You can expect approximate returns between Rs. 1500 to Rs. 3500 if you invest in low-risk plans offering moderate returns like fixed deposits, money market accounts, debt mutual funds etc. However, investment in equity funds may fetch higher returns depending on the market performance.

Q. How do I diversify my investments within a 1 lakh portfolio?

You can diversify your investment within a 1 lakh portfolio by investing in various assets depending on your goals and time horizon. Invest a portion in fixed deposits and debt funds for stable returns and in equity mutual funds and stocks for growth. 

Related Articles

Reference links:

https://economictimes.indiatimes.com/mf/analysis/i-want-to-invest-rs-1-lakh-which-mutual-fund-should-i-choose/articleshow/94758764.cms?from=mdr
https://cleartax.in/s/1-year-investment-plan

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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1. Tax benefits are subject to conditions under Sections 80C, 80D, Section 10(10D) and other provisions of the Income Tax Act, 1961.

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