If you have Rs 5 lakh to invest what are your best options? Well, it is difficult to find one investment avenue that can provide adequate returns in a short period. So, investors should always review situation first. CNBC-TV18.com spoke to a few experts to get a sense of what should be the best approach in the current environment. Here are the top investment strategies:
Spread across sectors in equities
Experts consider equity as one of the most rewarding asset class to bet on. However, the recent volatility may worry some. Though, it's vital to note that if someone actually has some savings to invest and don't need that money for at least 5 years, it's always ok to buy stocks, experts opine.
When someone is invested for the long term and markets are low, he/she has time to recover losses.
However, analysts say that investors should be cognizant of the fact that equity has higher risks versus asset classes like debt. So, those with moderate/high-risk appetite should have a higher allocation to equities. On the other hand, an investor with low-risk appetite should have 30-40 percent exposure to equities and the balance towards debt.
Pick these mutual funds
Investors can consider
investing in mutual funds as these can help in diversifying unsystematic risks. But before deciding which funds to pick, it's important to determine the investment time horizon. Someone who would need the money in a few months or less than a year should invest in ultra short-term debt products. Those who can invest for more than 5 years should go for equity mutual fund schemes, experts say.
Most experts agree that index funds are also good investments for long-term investors. They are low-cost options for obtaining a well-diversified portfolio that passively tracks an index.
Further, those who are young can have a portfolio biased towards equity because they are in a position to take risk.
In an earlier conversation with CNBC-TV18, Anand Dalmia, Co-Founder at Fisdom shared best mutual fund options. Here are his investment bets:
| Fund name | 3-year returns (absolute) | 5-year returns (absolute) |
| ICICI Pru Balanced Advantage Fund | 67.66% | 60.97% |
| SBI Multi Asset Allocation Fund | 46.52% | 55.23% |
| Parag Parikh Flexi Cap Fund | 123.91% | 24.14% |
| Kotak Flexi Cap Fund | 93.65% | 68.52% |
Go for alternative investment options
Investors who already have an existing portfolio of low-risk, low-return products along with some exposure to equity via stock or mutual funds, should go for
Alternative Investment options.As the name suggests these assets add value to the existing investment portfolio by offering a fair bit of diversification and these are not directly linked to the ups and downs of the stock market. Additionally, investors can even stagger Rs 5 lakh amount across multiple alternative investments that align with the expectations the most, experts believe.
Consider gold investments, in form of ETFs and bonds
Gold has consistently rallied upwards over time, and its status as a tried-and-tested investment instrument is well understood by households across India. Hence, this can also serve as a valuable diversification tool within an investment portfolio.
According to Jaydeep Banerjee, Co-Founder at Dvara SmartGold, this diversification can help reduce overall portfolio risk and improve long-term returns. Furthermore, gold's tangible nature makes it a reliable hedge against geopolitical tensions, economic uncertainties and potential inflationary pressures.
However, gold should be better invested as an asset class other than jewellery. Gold in the form of ETFs, funds and
sovereign gold bonds (SGBs) are options available in the market.
Investment in gold through SGB is a decent option as it provides liquidity, doesn't require any storage cost and is easier to redeem.
