Smart Investment Strategies For 50 Lakh Inr In India

If you're looking to invest 50 lakhs in India, there are several options available to you. The best choice for you will depend on your financial goals, risk tolerance, and current market conditions. One option is to invest in a mix of different assets, such as stocks, bonds, mutual funds, and real estate, to spread out the risk and increase the chances of achieving your desired returns. Another strategy is to take advantage of compound interest by investing in growth stocks or utilising rupee-cost averaging. Consulting a financial advisor can help you create a customised investment plan tailored to your specific needs.

Medical insurance policy

Medical insurance is an important investment to protect yourself and your family from financial instability during health emergencies. With the ever-increasing cost of healthcare in India, a medical insurance policy can provide peace of mind and ensure that you don't have to compromise on your health due to financial troubles.

When choosing a medical insurance policy, it is important to consider your specific needs and requirements. Here are some key factors to keep in mind when selecting a medical insurance policy in India:

• Coverage: Look for a policy that offers comprehensive coverage, including hospitalisation expenses, pre- and post-hospitalisation expenses, daycare expenses, and coverage for critical illnesses.
• Network Hospitals: Choose a policy that has a wide network of hospitals in India, including your preferred hospital. This will ensure easy access to medical facilities and cashless treatment options.
• Claim Settlement Ratio: Opt for an insurance provider with a high claim settlement ratio, preferably above 85%. This indicates the likelihood of your claims being approved and settled promptly.
• Waiting Period: Select a policy with a shorter waiting period for pre-existing diseases. This will ensure that you receive coverage for such illnesses as soon as possible.
• Add-on Covers: Consider policies that offer optional add-on covers or riders, such as maternity cover, hospital cash benefit, critical illness cover, etc. These can enhance your base policy and provide additional financial protection.
• Premium: Compare the premiums charged by different insurance providers and choose one that offers the best value for your money. Consider both the coverage benefits and the premium rate when making your decision.
• Star Health Insurance: Star Health is India's first stand-alone health insurance company, offering policies for medical, personal accidents, and overseas travel. They have a wide range of health insurance plans with affordable premium rates and a hassle-free claim settlement process. Star Health also provides disease-specific policies for critical illnesses, cancer, and cardiac ailments.
• Niva Bupa Health Insurance: Niva Bupa offers the Reassure 2.0 plan, which provides comprehensive coverage with no room rent limit and unlimited restoration benefits. They also have the Health Recharge policy, which is a top-up plan that increases your base policy's sum insured.
• HDFC ERGO Health Insurance: HDFC ERGO offers the Optima Secure plan, which provides 4x coverage for an affordable cost. It includes coverage for in-patient, pre-hospitalisation, and post-hospitalisation expenses, as well as AYUSH treatment and e-opinion for critical illness.
• Aditya Birla Health Insurance: Aditya Birla's Activ Assure Diamond Plan offers extensive coverage for hospitalisation, home healthcare, and domiciliary hospitalisation. It also covers mental illness hospitalisation, obesity treatment, and specific illness cover.
• Care Health Insurance: The Care Supreme plan provides maximum coverage for individuals and families, along with unique wellness benefits and extra savings. It covers in-patient hospitalisation, domiciliary hospitalisation, AYUSH treatment, and international second opinions.
• Bajaj Allianz Health Insurance: The Bajaj Allianz Health Guard plan is a comprehensive policy that protects against major healthcare expenses. It covers in-patient hospitalisation, day care procedures, maternity benefits, and preventive health check-ups.

Remember to carefully review the terms and conditions, inclusions, and exclusions of each policy before making a decision. It is also advisable to consult with a financial advisor to ensure that you choose a medical insurance policy that best suits your needs and budget.

Gilt funds

• ICICI Prudential Constant Maturity Gilt Fund
• SBI Magnum Gilt Fund
• ICICI Prudential Gilt Fund
• Canara Robeco Gilt Fund
• UTI Gilt Fund

Equity mutual fund schemes

Equity mutual funds are a type of mutual fund that invests in the stock market. They are managed by professionals who aim to deliver maximum returns while controlling risk. These funds are known for their high returns and diversification, as they typically hold 40-50 stocks in their portfolio. However, they can experience short-term fluctuations, so investors need to be patient and stay invested for at least five years.

There are various types of equity mutual funds in India, categorised by investment strategy, market capitalization, and tax treatment. Here are some examples:

Investment Strategy-based Categorization:

• Thematic or Sectoral Funds: Follow a specific investment theme or sector, such as BFSI, IT, or pharmaceuticals. These carry higher risk due to their focused nature.
• Focused Equity Fund: Invests in a maximum of 30 stocks of companies with specified market capitalization at the time of the scheme's launch.
• Contra Equity Fund: Employs a contrarian strategy by investing in underperforming stocks at low prices, expecting long-term recovery.

Market Capitalization-based Categorization:

• Large-Cap Funds: Invest a minimum of 80% of their assets in the top 100 large-cap companies, offering more stability than mid-cap or small-cap funds.
• Mid-Cap Funds: Invest around 65% of their assets in mid-cap companies (101st to 250th by market capitalization). They offer higher returns than large-cap funds but with increased volatility.
• Small-Cap Funds: Invest about 65% of their assets in small-cap companies (251st or lower by market capitalization). This category includes over 95% of Indian companies and offers the potential for high returns but with higher volatility.
• Multi-Cap Funds: Invest in a mix of large-cap, mid-cap, and small-cap companies, with the fund manager adjusting the portfolio to match market conditions and the scheme's investment objective.
• Large and Mid-Cap Funds: Invest in both mid-cap and large-cap companies, offering a balance between lower volatility and better returns.

Tax Treatment-Based Categorization:

• Equity Linked Savings Scheme (ELSS): The only equity scheme offering tax benefits of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. ELSS invests at least 80% of its assets in equity and has a three-year lock-in period.
• Non-Tax Saving Equity Funds: All other equity funds besides ELSS are non-tax saving schemes, and their returns are subject to capital gains tax.

When investing in equity mutual funds, it is essential to assess your financial goals, risk tolerance, and investment horizon. These funds are suitable for investors with a high-risk appetite, experienced investors seeking diversification, and those committed to long-term investments.

Growth stocks

If you are looking to invest 50 lakhs in India, here are some of the top growth stocks to consider:

Pharmaceuticals

This industry has been identified as one of the fastest-growing in India, with companies such as Caplin Point Laboratories Ltd showing strong potential. Pharmaceuticals had 178 and 84 companies in the top growth stocks list for 5-year and 3-year sales compounded annual growth rate (CAGR), respectively.

Real Estate / Construction

This sector also features prominently on the list of top growth stocks, with 95 companies in both the 5-year and 3-year sales CAGR lists. Some companies to consider include Ahluwalia Contracts (India) Ltd and Man Infraconstruction Ltd.

Auto Ancillaries

With 101 and 88 companies in the 5-year and 3-year sales CAGR lists, respectively, this sector is another strong contender for growth stock investment.

Bajaj Holdings & Investment

This company features in the top 5 on both the 5-year and 3-year sales CAGR lists, indicating strong and consistent growth.

Interglobe Aviation (Indigo)

This company also features in the top 5 on both the 5-year and 3-year sales CAGR lists, showcasing its potential for sustained growth.

Jio Financial Services

Ranking as the #1 fastest-growing company in India based on 3-year sales CAGR, Jio Financial Services could be an attractive investment opportunity.

It is important to remember that investing in growth stocks requires a keen eye for market dynamics, patience, and a tolerance for risk. Conduct thorough research and consider consulting a financial advisor before making any investment decisions.

Real estate investment trusts (REITs)

REITs are a good option for those with 50 lakhs to invest because they require a much smaller initial investment, with some sources saying as little as 300-50,000 rupees. This makes them accessible to small investors. They also allow investors to diversify their portfolios by exposing them to real estate without the hassle of owning and managing commercial property.

REITs are managed by a team of trustees or a board of directors, who are responsible for making investment decisions. They are required to distribute at least 90% of their net distributable cash flow, or rental income, to investors as dividends at least twice a year. The remaining 10% can be reinvested into the REIT.

There are different types of REITs, including equity REITs, mortgage REITs, hybrid REITs, publicly traded REITs, public non-traded REITs, and private REITs.

• Diversification of investment portfolio
• Small initial investment
• Professional management
• Regular income generation
• Capital gains

Some limitations of investing in REITs include:

• Limited options: there are currently only 3 REITs and 1 International REIT Fund in India
• Low liquidity: there are few market participants, especially retail investors
• Taxable dividend: dividends are completely taxable according to the applicable slab rate

Overall, REITs are a good option for those looking to invest 50 lakhs as they provide an accessible way to invest in real estate with the potential for regular income and capital gains.

Frequently asked questions