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  • Category: Investments

    How to invest one lakh sixty thousand to get maximum benefit?

    Wondering how to invest one lakh sixty thousand rupees? Find financial advice from experts on this page.

    Now Banking sector has markedly reduced interest rate. As such the people who has to sustain themselves depending on bank interest will suffer due to this reduction, no doubt.

    My friend, rather aged enough, will get 1 lakh 60 thousand rupees in hand after maturity. But she is no more interested for Bank FD due to reduced interest rate, though banks are all secure platform for investment.

    How she can invest the money to get the maximum benefit?

    Experts: do advice.
  • #139717
    Let us see how much the one lakh sixty thousand will earn at various rates.
    Bank deposit rates are around 8 % maximum now. That will fetch an amount of 12800 as interest in one year.
    If the person is senior citizen then the amount can be invested in senior citizen deposit scheme where there is a slight higher arte say 8.5 % now.
    Rates are subject to change.
    The stock market or mutual fund investment can fetch higher return on long term .The higher return rates venues also have higher risk. There cannot be a guarantee of return also. And for this amount a difference of 1% n the rate makes a difference of Rs 1600 in an year, or about 133 rupees per month.
    It is not advisable to invest this relatively smaller amount in long term investments and high risk investments, at this age, unless there is no necessity for immediate money for the person. For elder people's investment safety, liquidity and consistency is needed. So either bank fixed deposits or Post office deposits are suggested.
    However if the person is ready to take risks, the money can be invested some established, consistently dividend paying company shares , debenture or Mutual Funds.

  • #139724
    Here are some of the options for the investment.

    1. Liquid Fund - compared to FD, they are secure and also easy to break. You don't have the premature fees for breaking the fund. And the interest rate is 1-1.25% more than the FD. You can park this for 390 days and renew it every year.

    2. NPS - You can invest into NPS if you have not reached 60 years of age. And this can help you get exposure to equity and debt investment. however returns will take some time as the horizon here is longer.

    3. Debt fund - This is another option to invest your fund. I have noticed debt fund performing very good in current scenario. The fund can be kept for yearly renewal or for 3 or 5 years horizon.

    4. Equity fund - If you have crossed 60 years of age, then this may not be the right time to invest into equity. But it can get you good returns if you have some time like investing after 30s.

    These are some of the options for investing into the various financial instruments.

  • #139727
    You have not mentioned the investment purpose and time horizon. You have also not mentioned about risk-taking ability of your friend. In the absence of these three criteria, proper advice can't be given.

    However, generally speaking:
    (a) If your friend needs the money within next three months or so, he/she can invest the same in liquid mutual fund or ultra-short term bond mutual fund. He/She can expect a return of 8-9% from this category of fund.
    (b) If his/her is 3 years or so, he/she can invest in debt-oriented hybrid (MIP) fund. A return of 10-12% is expected.
    (c) As your friend comes in senior citizen category and his/her risk-taking ability is not known, I don't advice investing in equities or equity mutual funds.

    Beware! I question everything and everybody.

  • #139740
    Though many experts have advised against investing in equity I have a contrarian view. If the investor can afford to keep the amount invested for at least a period of 5 years I think there is not much risk and perhaps most will agree that this is likely to fetch best earnings. To reduce the risk further only a part of the said amount, say, 1/3 rd may be invested in equity.
    However, selection of the equity is the most important one. The investor should consider an expert. There are a few good dividend paying stocks in the market, which minimize the risk component. Factors like promoters' holdings, ratios like P/E, debt to equity, etc., book value, current and previous sales, year on year profit etc. may be considered to self analyse the stock.
    I advocate for investing a part in equity primarily because an amount of 1 lac sixty thousand, in my opinion, is a good investment amount and should bring in a substantial earning to the investor. For this, certain amount of risk is advisable which decreases if the investment can be held for 5 or more years.

  • #139745
    You can invest your lumsump money in your fixed deposit. Fixed deposit offers higher interest rate than saving account.

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