A sum of Rs 5 lakhs is a sizeable capital to earn a good return. A potential investor with such an amount of money is usually under the dilemma of what the right option will be – where he can earn as high as possible and not have a high risk of losing capital. There are various things you can do with Rs 5 lakhs to multiply it.
Equity -Oriented (Riskiest)
✔
Stocks and Equities and ETFs – Large-caps, mid-caps and small caps
✔
Various Mutual Funds – Equity, Debt, Hybrid
✔
Derivatives – Futures & options
Fixed Income (Least Risky)
✔
Saving Schemes such as Public Provident Fund (PPF), SCSS and others
✔
Bonds – government and private
✔
Fixed Deposits – bank and company FDs
Alternative (Low to Medium Risk)
✔
Real estate – commercial and residential
✔
Bullion – gold, silver, platinum
Comparison of Investment Options
The
next thing you need to decide is which of these you can invest in with the
following criteria. Let us do a comparison -
1) High ROI
Equity and mutual funds are known for high ROI over a long period of time. However, this return has no fixed timelines. Bonds and other medium risk options are dependent upon the market sentiment when you are going to sell the instrument. E.g., Even if you have been holding a real estate for 10 years and its value has been increasing, the time period in which you are going to sell is important. If there is a real estate crash, you will end up receiving a lower ROI.
Low-risk options such as FDs give a fixed rate of
return which you know at the beginning of the investment. Company FDs offer the best returns as seen below –
Investor
|
Interest rates
|
Amount
|
Tenor
|
Return
|
ROI
|
New customer
|
8.6%
|
₹5 lakhs
|
5 years
|
₹2,55,299
|
51%
|
Existing customers
|
8.85%
|
₹5 lakhs
|
5 years
|
₹2,64,033
|
53%
|
Senior Citizens
|
8.95%
|
₹5 lakhs
|
5 years
|
₹2,67,549
|
54%
|
Among other small saving schemes – the rate of
interest is fixed for a year and usually does not change much.
2) Safety, stability, and guarantee
All low-risk investment options are great for safety
and stability of returns. You can be assured of your principal and interest
repayment. If you are keen on these then going for company FDs then you can
consider Bajaj Finance FD which not offers stable returns but a high ROI.
Options with medium to high returns are great for
people willing to risk their Rs. 5 lakh capital to an extent. Analyze your risk
appetite – what is the purpose of investment, how much income do you have, age,
and other factors and then go for these options.
3) Ease of investing
You can invest in most of these options easily, but
for bank related and government schemes, you need to go for verification and
documentation. NBFCs like Bajaj Finance offer a completely online process for management
and tracking of FD accounts. You can also use the Online
fixed deposit interest calculator
to understand the ROI on your capital of Rs. 5 lakhs.
4) Availability of credit
Also if you want to avail a loan against FD, when
there are no liquid funds available, fixed deposits can be your savior. By
investing in Bajaj Finance FD, you can easily avail loan up to 75% of the
maturity amount. This facility is not available in any of the other investment
options except PPF.
5) Other beneficial features
Most high-risk options do not have any assurance of
returns or option to choose the frequency of interest payouts. In FDs, you can
choose periodic interest payouts (monthly, quarterly, and half-yearly). The
option of cumulative and non-cumulative interest payouts is not available with
most options except FDs. You can choose to get your interest earnings either
periodically or at the end of the maturity period.
Investing
in Bajaj Finance FD is risk-free as it has ICRA’s MAAA and CRISIL’s FAAA
ratings. Such high credibility ratings imply that your investment amount of Rs.
5 lakhs is never at risk.
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