Smart Ways To Invest 8 Lakhs In India

If you're looking to invest 8 lakhs in India, there are several options to consider. Firstly, you could invest in fixed-income products, such as real estate-backed structured debt, which offers both capital preservation and higher yields. Alternatively, fixed deposits in banks or post office monthly income schemes are considered safe options, although the returns may be lower. For those seeking higher returns, investing in dividend-paying stocks or real estate investment trusts (REITs) could be an option, although these carry more risk. Other suggestions include liquid funds, equity-linked savings schemes (ELSS), and high-growth funds. It's important to carefully research and understand the risks and returns of each investment option before making a decision.

Real estate-backed fixed-income products

One example of such a product is the real estate structured debt offered by Assetmonk. With a minimum investment of 10 lakhs, you can expect an assured Internal Rate of Return (IRR) of 17%. This investment has a short duration of 36 months and provides the benefit of stress-free investing and attractive high returns.

• Diversification: These investments allow you to diversify your portfolio by adding exposure to the real estate market, which may not be closely correlated with stocks and bonds.
• Higher yields: Real estate-backed products often provide higher returns compared to traditional investments.
• Capital preservation: Some structured debt products offer protection against significant losses, making them attractive for risk-averse investors.
• Predictable cash flows: Regular and predictable cash flows in the form of interest payments make these investments suitable for income-seeking investors.
• Exposure to real estate market growth: By investing in these products, you can indirectly benefit from the growth of the real estate market and potential increases in property values.
• Professional management: Experienced professionals carefully manage these investments to optimize risk and return.
• Liquidity: Real estate-backed structured debt products, such as ABS, MBS, or CMBS, are traded in the secondary market, providing investors with liquidity options.

However, it's important to note that returns from real estate-backed fixed-income products may fluctuate based on market conditions and the performance of the underlying assets.

Fixed deposits

FDs provide a guaranteed return on investment, with the interest rate remaining the same until maturity, regardless of changes in bank FD card rates. This offers a high degree of income certainty, even higher than most small savings schemes. Additionally, FDs offer capital protection, with deposits insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the Reserve Bank of India (RBI). Deposits of up to Rs. 5 lakhs per bank per depositor are covered in case of bank failure.

Another benefit of FDs is the tax benefit they offer. Investors can claim deductions of up to Rs. 1.5 lakhs per financial year under Section 80C of the Income Tax Act on the principal component of tax-saving FDs with a 5-year lock-in period. However, it is important to note that the interest income from FDs is taxable.

FDs also provide liquidity and flexibility. Depositors can leverage their FDs to avail loans or secured credit cards, especially useful for those with nil or low credit scores. Additionally, FDs offer the option of premature withdrawal, although this may be subject to a penalty of up to 1% on the effective interest rate.

When choosing an FD, it is important to consider your liquidity, investment objective, investment horizon, and current FD interest rates. Compare prevailing FD interest rates across banks and look for special interest schemes or additional facilities, such as secured credit cards, loan against FD, sweep-in, and sweep-out facilities.

Dividend-paying stocks

When considering dividend-paying stocks, it is essential to focus on stable companies with a strong track record of consistent dividend payouts. Look for businesses that have consistently paid out dividends over time, indicating their reliability and financial health. This approach can help minimise risk and ensure a more predictable income stream.

Some examples of companies that have been known to offer high dividend yields in India include Xchanging Solutions Ltd., Bharat Petroleum Corporation Ltd., Chennai Petroleum Corporation Ltd., Indian Oil Corporation Ltd., and Hindustan Petroleum Corporation Ltd.

It is worth noting that dividend income is generally tax-free for individual investors up to a certain limit. However, it is crucial to stay updated with tax regulations to ensure compliance.

While investing in dividend-paying stocks can provide a regular income, it is important to remember that the stock market involves inherent risks. The value of your investments can fluctuate, and there is no guarantee of capital appreciation. Therefore, it is advisable to conduct thorough research, assess your risk tolerance, and consider diversifying your investment portfolio across different asset classes to balance potential returns and stability.

Liquid funds

When choosing a liquid fund, it is important to consider the credit rating of the underlying debt instruments, the various charges associated with the fund, and the prevailing bank deposit interest rates. Diversification is also key to reducing risk and ensuring greater stability.

• Quant Liquid Plan – Direct Plan – Growth (AUM: ₹1613.51 Crore, Expense Ratio: 0.29%, 1-Year Returns: 5.38%)
• IDBI Liquid Fund – Direct Plan – Growth (AUM: ₹696.23 Crore, Expense Ratio: 0.13%, 1-Year Returns: 5.37%)
• Mahindra Manulife Liquid Fund – Direct Plan – Growth (AUM: ₹520.37 Crore, Expense Ratio: 0.15%, 1-Year Returns: 5.46%)
• Franklin India Liquid Fund – Super Institutional – Direct – Growth (AUM: ₹1577.99 Crore, Expense Ratio: 0.13%, 1-Year Returns: 5.39%)
• Edelweiss Liquid Fund – Direct Plan – Growth (AUM: ₹1493.8 Crore, Expense Ratio: 0.15%, 1-Year Returns: 5.39%)
• Aditya Birla Sun Life Liquid Fund – Direct Plan – Growth (AUM: ₹35226.23 Crore, Expense Ratio: 0.21%, 1-Year Returns: 5.42%)
• Nippon India Liquid Fund – Direct Plan – Growth (AUM: ₹26604.62 Crore, Expense Ratio: 0.2%, 1-Year Returns: 5.37%)
• PGIM India Liquid Fund – Direct Plan – Growth (AUM: ₹730.34 Crore, Expense Ratio: 0.17%, 1-Year Returns: 5.40%)
• Baroda BNP Paribas Liquid Fund – Direct Plan – Growth (AUM: ₹7013.61 Crore, Expense Ratio: 0.19%, 1-Year Returns: 5.46%)
• LIC MF Liquid Fund – Direct Plan – Growth (AUM: ₹4654.72 Crore, Expense Ratio: 0.16%, 1-Year Returns: 5.36%)
• Axis Liquid Fund – Direct Plan – Growth (AUM: ₹29631.79 Crore, Expense Ratio: 0.15%, 1-Year Returns: 5.42%)
• Tata Liquid Fund – Direct Plan – Growth (AUM: ₹13449.41 Crore, Expense Ratio: 0.21%, 1-Year Returns: 5.34%)
• UTI Liquid Cash Plan – Direct Plan – Growth (AUM: ₹25350.35 Crore, Expense Ratio: 0.14%, 1-Year Returns: 5.40%)
• Mirae Asset Cash Management Fund – Direct Plan – Growth (AUM: ₹5737.02 Crore, Expense Ratio: 0.17%, 1-Year Returns: 5.41%)
• ICICI Prudential Liquid Fund – Direct Fund – Growth (AUM: ₹47482.72 Crore, Expense Ratio: 0.2%, 1-Year Returns: 5.33%)
• HSBC Liquid Fund – Direct Plan – Growth (AUM: ₹11009.85 Crore, Expense Ratio: 0.12%, 1-Year Returns: 5.41%)
• DSP Liquidity Fund – Direct Plan – Growth (AUM: ₹12106.5 Crore, Expense Ratio: 0.15%, 1-Year Returns: 5.38%)
• Bank of India Liquid Fund – Direct Plan – Growth (AUM: ₹461.91 Crore, Expense Ratio: 0.13%, 1-Year Returns: 5.45%)
• JM Liquid Fund – (Direct) – Growth (AUM: ₹1854.34 Crore, Expense Ratio: 0.15%, 1-Year Returns: 5.39%)
• SBI Liquid Fund – Direct Plan – Growth (AUM: ₹63099.51 Crore, Expense Ratio: 0.18%, 1-Year Returns: 5.34%)

Gold

Beating Inflation

No matter how the market changes, gold retains its value and helps beat inflation. This is because the value of gold increases with the cost of living and often reaches its highest during high inflation periods.

Portfolio Diversification

Limited Supply

Liquidity

Currency Devaluation

Crisis Commodity

Physical Gold

The traditional way to invest in gold is to buy physical gold in the form of coins, jewellery, or ornaments. However, this method comes with making charges, storage hassle, and an increased risk of theft.

Many jewellers across India offer gold schemes to ease the purchasing process. These schemes usually work through regular investments over a defined period. After the scheme matures, investors can use the lump sum to buy gold.

Digital Gold

Digital gold is an investment option that is growing in popularity. Fintech platforms allow investors to buy or sell gold through digital transactions.

Sovereign Gold Bonds

Sovereign Gold Bonds are a gold investment option introduced by the Reserve Bank of India. Investors can buy the bonds in digital, physical, or dematerialised formats. These bonds have a tenor of eight years with an exit option from the fifth year onwards. They provide the benefits of gold ownership without physical possession.

Frequently asked questions