Best Ways To Invest 1 Lakh in Business and Investment For Good Returns
Are you having 1 Lakh in your pocket or account as a free money and you don’t know where to drop the money so it doesn’t stay idle? Do you know that there are lots of investment vehicles you can invest that amount of money into?
Nowadays, people say they have 1 Lakh for investment and they want it to yield good returns quickly, well there are many ways you can invest 1 Lakh for good returns. Here are the best ways to invest 1 Lakh for good returns:
How To Invest 1 Lakh in India
1. Balance Fund
One best way to invest your 1 Lakh for good returns is to invest it in a balance fund. This type of investment is for those that are looking for moderate returns and safety. This investment follows the principle of balancing, so they divide the fund and invest in both equity and debt therefore you will be enjoying the benefits of the two.
This investment is aimed at investors looking for income, capital appreciation and safety and it has a fixed minimum and maximum an invested amount must remain.
2. Multi-cap Mutual Fund
Investing in mutual fund is a risky investment and is therefore not suitable for everyone but if your risk appetite can take you then you can invest in this fund. You should expect 12 to 17% return from the funds.
Mutual funds are diversified and can be invested in stocks across market capitalization. The top multi-cap diversified funds are: Franklin India High Growth Companies Fund, ICICI Prudential Exports and Other Services Fund, Kotak Select Focus Fund, Mirae Asset India Opportunities Fund, UIT MNC Fund, Tata Ethical Fund, and Principal Growth Fund.
3. Equity Linked Savings Scheme (ELSS)
Investing in ELSS will not only give you good returns but also double your money in 6 to 7 years, it is risky because of its direct link to stock market. So it’s your choice but looking at it from the aspect of India past data and future economy, we can say the country has a stable government therefore you can invest in it and with time, you invest in equities. Investing in balanced mutual and debt funds will reduce the risks.
4. Public Provident Fund (PPF)
This is especially for those who want safe investment that has low or no risk. PPF was introduced in India in 1968 by National Savings Institute under the Ministry of Finance.
This investment is completely ensured by the Central Government and it is implied for activating little funds through offering venture with sensible returns consolidated with wage tax cuts. To contribute, you will need to open an account under Open Provident Fund.
5. Direct Equity
Another best way to invest 1 Lakh is by investing in Direct Equity which is for those ready to take high risk. It is risky and also rewarding so you can weigh the risk and the reward and then decide if you will go on with the investment or not.
This investment provides capital funding in exchange for equity interest without you purchasing the regular share of a company’s stock. Those who can balance risk and reward while dealing with investment are the lucky ones.
The reason why direct equity is risky is because of the complexity of decoding information which is the most important aspect of direct equity. Decoding of information in equity is complex because information relating to equity is only contained in companies financial report for example balance sheet. You must be able to decode information before you invest in direct equity to avoid loss.
6. Bank Fixed Deposit
Bank fixed deposit is a good investment since it is rare for banks to fail in India, you will not lose your money and there is no hidden cost since rates are upfront.
What you decide to do with the 1 Lakh depends on several factors like your risk appetite, that is, the type of risks you can take and how long you want to invest, that is the time frame. We have different appetite when it comes to taking risks, some don’t even want to take any risk at all.
It is advisable that you do not spend the entire 1 Lakh on only one investment, you can share it and use it for two or three investments.
For someone who wants to be safe and does not want to take any risk, you can invest in Bank FDR, Corporate Bonds, FMP, and Debt Mutual Funds. For those that can take minimum risk, invest in Equity Mutual Funds, Arbitrage funds.
And for those that can high risks, invest in new IPOs through Direct Equity. It is important you have full knowledge of investment before you start investing, many people make the mistake of investing without knowing important details like the return the investment will yield and so on.