Where can I invest my 15 lakhs in India?

Investing 15 lakhs in India can seem like a daunting task with so many options to choose from. However, with proper research and planning, you can make your money work for you and see it grow over time. In this comprehensive guide, we will explore the best investment avenues for 15 lakhs in India that can help you meet your financial goals.

Break up your investment across asset classes

The first step towards investing 15 lakhs is to break up your corpus across different asset classes. This ensures that your investment is diversified and cushioned against market volatility. Here is how you can split your 15 lakhs:

– Debt investments like FDs, RDs, debt mutual funds: 35-50% ie Rs 5-7.5 lakhs
– Equity investments like stocks, equity mutual funds: 35-50% ie Rs 5-7.5 lakhs
– Gold: 10-15% ie Rs 1.5-2.25 lakhs
– Cash: 5-10% ie Rs 75,000-1.5 lakhs

Diversification helps contain the overall risk in your portfolio. So, even if one asset class underperforms, the others can potentially balance it.

Best investment options for debt allocation

When it comes to debt investments, safety and stability of returns are preferable over high returns. Some suitable options are:

Fixed Deposits

Fixed deposits offered by banks and NBFCs are one of the safest investment avenues. The returns range between 5-7% and your principal amount remains untouched for the FD tenure. Leading banks like SBI, ICICI, HDFC offer flexible tenure options from 7 days to 10 years. Senior citizens can avail higher interest rates up to 0.5%. You should ladder your FDs to diversify them across different durations.

Recurring Deposits

RDs are similar to FDs but require you to deposit a fixed amount monthly/quarterly instead of a lumpsum. The cumulative interest earned is paid out at maturity. The interest rate is comparable to FDs. RDs instill investment discipline and help you accumulate a large corpus through small periodic deposits.

Debt Mutual Funds

Debt funds invest in fixed-income securities like bonds, government securities, corporate debentures etc. Their returns range between 6-8% based on the fund duration and portfolio. Debt funds offer higher liquidity than FDs and can be withdrawn any time. They also enjoy indexation benefit after 3 years, reducing your tax liability. Some popular types of debt funds include banking and PSU funds, corporate bond funds, dynamic bond funds, and liquid funds.

Small Savings Schemes

Backed by government guarantee, small savings schemes like PPF, NSC, SCSS offer assured returns of 7-8% with tax benefits up to Rs 1.5 lakhs under Section 80C. The PPF tenure is 15 years while NSC and SCSS have 5 and 10 years tenure respectively. You can allocate a portion of your debt investment to these schemes.

Company Deposits

Reputed companies offer fixed deposits with guaranteed returns up to 8%. These are safer than company FDs as they are secured by a trust. Bajaj Finance, Mahindra Finance, Shriram Transport Finance are some popular company FDs. However, only invest if the company has a strong financial position.

Best investment options for equity allocation

Equity is meant to generate inflation-beating returns over the long run. Though volatile in the short term, equities have delivered 12-15% CAGR over long durations. Some good options are:

Equity Mutual Funds

Equity funds provide professional management of your corpus by investing across stocks and sectors. Based on your risk appetite, you can choose between multi-cap, large-cap, mid-cap, small-cap, sectoral, thematic, and index funds. Investing through Systematic Investment Plan (SIP) helps averaging your purchase cost over market cycles.

Stocks

Investing directly in stocks after thorough research can help you earn higher returns than mutual funds. However, it requires an understanding of market cycles and company fundamentals. Invest across sectors and market caps to minimize volatility. You can also take exposure through ETFs like Nifty BeES which passively track the index.

National Pension System

The equity scheme of NPS invests up to 75% in stocks while the balance goes to debt. It is a low-cost investment managed professionally by PFRDA regulated fund managers. You can claim tax deduction up to ₹50,000 under Section 80CCD(1B). NPS enjoys E-E-E status and the maturity corpus is tax-free.

Best investment avenue for gold

Gold acts as a hedge against inflation and market volatility in your portfolio. The recommended allocation is 10-15% of the total investment amount. Some ways to invest in gold are:

Gold ETFs

Gold ETFs are units representing physical gold which can be bought/sold on the exchange like stocks. Each unit is backed by 1 gram physical gold. ETFs allow you to invest in gold in paperless form without storage hassles.

Sovereign Gold Bonds

Issued by RBI, these bonds represent debt obligations of the government secured by gold. They offer 2.5% p.a. interest besides capital gains if held till maturity. You can also redeem prematurely after the 5th year. The minimum investment is 1 gram.

Digital Gold

Offered by brokers like Paytm, PhonePe, Groww, and Stockal, you can invest in 24K gold starting from Re 1. The gold is stored securely on your behalf and can be sold any time at prevailing rates. Some apps offer delivery on accumulated holdings.

Physical Gold

You can invest 15 lakhs in physical gold like jewellery, coins or bars from a trusted jeweller. However, ensure to check for hallmarking and keep storage costs in mind. Avoid heavy jewellery for investment-grade gold.

Best options for parking emergency corpus

It is prudent to park 5-10% of your total investment as contingency funds in liquid instruments:

Savings Account

Maintain 6-12 months’ worth expenses in your savings bank account as ready liquidity for emergencies or unforeseen needs. Choose accounts offering higher interest rates up to 7%.

Liquid Funds

The safest category of debt funds, liquid funds invest in cash equivalents like T-bills with lowest interest rate risk. They offer higher returns than savings accounts along with instant redemption.

Arbitrage Funds

These funds exploit price differentials between cash and derivatives market to generate low-risk steady returns. The returns range between 5-7% similar to short-term debt funds.

Ultra Short Duration Funds

Investing in bonds and money market with under 1 year maturity, these funds offer relatively better returns than liquid funds with slightly higher risk.

Compare investment options

Here is a comparison of the top investment options for 15 lakhs to evaluate returns, safety, liquidity, costs, taxation and lock-in:

Investment Return Safety Liquidity Costs Tax Lock-in
FD 5-7% High Low Nil Taxable None
RD 7-8% High Low Nil Taxable None
Debt MF 7-8% Moderate High 0.5-2% Indexation benefit None
PPF 7-8% High Low Nil Tax-free 15 years
Equity MF 10-15% High High 1-2.5% 10% LTCG None
Stocks 12-18% High High 0.5-1% 10% LTCG None
NPS 12-14% High Moderate 0.1-0.25% Tax-free Till retirement
Gold ETF 12-15% High High 1-1.5% 20% with indexation None
Liquid Fund 5-6% High High 0.1-0.2% Taxable None

Ideal asset allocation

Based on your risk profile, investment horizon, and goals, the ideal asset allocation for investing 15 lakhs is:

– Debt funds/FDs/RDs: 40% ie Rs 6 lakhs
– Equity funds: 40% ie Rs 6 lakhs
– Gold bonds/ETFs: 10% ie Rs 1.5 lakhs
– Cash/liquid funds: 10% ie Rs 1.5 lakhs

This asset mix ensures stability as well as growth potential. The debt portion guarantees capital protection and liquidity. Equity aids in long-term capital appreciation. Gold acts as a diversifier while cash meets contingencies.

Choose the right financial products

Within each asset class, consider these factors to identify the specific financial products to invest in:

For debt: Opt for short-medium duration funds, corporate bond funds if chasing higher yields, RDs for disciplined investing, SCSS for senior citizens, company FDs of stable NBFCs offering 0.5-1% higher returns than banks. Split across 2-3 products.

For equity: Focus on flexi or multi cap funds as core portfolio, large cap for stability, mid cap for higher risk-reward ratio, thematic funds like infrastructure, banking & financial services, pharma for sectoral bets.

For gold: Go for gold ETFs and SGBs which offer higher returns than physical gold.

For cash: Park in liquid funds rather than savings account to enjoy higher returns of 6-7% with instant redemption.

Choose the right financial instruments

The specific financial instruments you can consider within each asset class based on your preferences are:

Debt
– ICICI Bank FD
– Bajaj Finance FD
– SBI Corporate Bond Fund
– HDFC Money Market Fund
– Post Office SCSS

Equity
– Axis Bluechip Fund
– Mirae Asset Large Cap Fund
– HDFC Mid Cap Opportunities Fund
– SBI Small Cap Fund
– Motilal Oswal S&P 500 Index Fund

Gold
– SBI Gold ETF
– HDFC Gold ETF
– Sovereign Gold Bond

Cash
– Axis Liquid Fund
– ICICI Prudential Liquid Fund
– Tata Money Market Fund

Review and reallocate periodically

Review your investment portfolio at least annually or when life goals change. Monitor the performance and assess if your asset allocation is drifting. Eliminate underperformers and reallocate capital to better performing avenues. Increase equity when goals are long-term and reduce when nearing the goal. Stay invested during market ups and downs. With periodic reviews and rebalancing, your investments will remain aligned to your goals.

Conclusion

Investing 15 lakhs requires clearly defining your investment goals, risk appetite, and ideal asset allocation. By distributing your capital across debt, equity, gold, and cash, you can benefit from diversification and stability in returns. Choosing the right investment products within each asset bucket further optimizes your portfolio. Stay patient and avoid tinkering too much with your investments. The power of compounding can help grow your wealth substantially over time if you remain invested. Periodic reviews and rebalancing also goes a long way in optimizing returns.

Leave a Comment