How To Invest One Lakh Rupees For 6 Months?

Financial planning is the best way to manage your income, invest in the right products and accomplish your future financial goals. A good financial plan combines the right balance between short-term and long-term investment options. While we often ponder top investment options, short-term investment products are no less important! They can provide good returns if you focus on the right investment plan.
 

There are different options to invest one Lakh for a short term of 6 months. Let us find out how you can do it best.
 

Before we get started, let us understand what short-term investments mean and why they are important.
 

What Is A Short-Term Investment Plan?

A short-term investment plan is any investment made for less than 5 years. It can be for managing an emergency, paying for a monetary goal due in the next few years, etc. A short-term investment can range between 6 months and 5 years. It is important to invest in short-term investment options for the following reasons:
 

• It Helps manage an emergency.
• Helps avoid breaking long-term investment plans during a financial crisis
• Helps achieve a short-term financial goal
• Helps make a better financial plan for the future, considering the short-term and long-term financial goals separately
• Provides reasonable returns
   

List of Short-Term Saving Options

Now that we have seen how a short-term investment can be beneficial let us find out how you can plan for a 1 Lakh investment for 6 months.
 

• Recurring Deposit - A recurring deposit is a short-term investment option wherein you can invest a fund regularly and earn a fixed rate of interest. The benefits of investing in a recurring deposit are:
  
  
  • The period can range between 6 months and 10 years.
    
    
  • Opening the RD account is a simple process. It is available and accessible by many banks in India. You can open it by linking your current savings bank account, park in the 1 Lakh rupees for 6 months, and ensure the money with interest earned at maturity.


• Fixed Deposit - Fixed deposit is one of the popular safe 1 Lakh investment plans. You can invest a lump sum for a fixed period and earn a fixed interest rate. The benefits of investing in a fixed deposit are:
  
  
  • The period can range between 7 days and 10 years.


• Money Market instruments - Money market instruments are short-term debt funds that the government and companies provide to the people to raise funds for their investments or business expansions. Some common debt instruments are:
  
  
  • Treasury bills - Treasury bills are short-term borrowing instruments issued by the government to help investors invest funds for a short term, such as 91 days, 182 days, and 364 days. They are advantageous considering the reduced market risk.
    
    
  • Commercial papers - It is a short-term debt instrument issued by a company to the general public. The investment can last up to 270 days.
    
    
  • Corporate bond funds - It is a mutual fund investment wherein 80% of the fund is invested in corporate bonds. The business entities sell these instruments to manage their financial needs, such as working capital, marketing, etc.


• Corporate Fixed Deposits - A corporate fixed deposit is a short-term investment option that helps you invest a fund for a fixed period at a fixed interest rate. Financial and Non-Banking Financial Companies provide these corporate fixed deposit investment options. The option provides a guaranteed¹ return, and the investment period can range between a few months to a few years. It is one of the best 1 Lakh investment options.
  
  
• Mutual fund - Mutual fund investments are highly customisable. You can choose the fund options between the equity, hybrid and debt funds and the investment period based on your financial requirements. Mutual funds are certainly a good option if you are looking for options on where to invest 1 Lakh rupees safely for more returns. The Asset Management Company will manage your investment in the financial market and take the appropriate investment decisions to help accomplish your financial goals for the short term.
  
  
• Stock Market - If you are passionate towards investing in the stock market and have the necessary knowledge to handle the fluctuating market conditions, you can invest 1 Lakh in the equity stock market for 6 months. Although the stock market investment can provide more returns, it involves a risk if you invest in equity funds. Therefore, having the right financial and emotional stability is important for investment in the short term.

While short-term investment plans solve your emergency financial crisis and help you accomplish your short-term goals, long-term investments are required to secure your future.

Long-term investments provide more returns while accounting for the inflation rate. Therefore, it is important to focus on savings, investments and retirement plans to increase your wealth, fulfil your long-term financial goals and secure funds for the future. In addition, investing in the appropriate pension plan will help maximise your financial benefits if you plan to retire early. At Tata AIA, we provide plans with savings and investment benefits. For example, the ULIP plan provides a life cover and the opportunity to invest in financial securities for market-linked returns at maturity. Moreover, you can invest in the fund options based on your risk appetite and switch between them when the market conditions are not favourable.
 

Therefore, comparing the different products and choosing the right short-term and long-term investment plans will help you make a balanced financial plan and help you lead a peaceful life.

Conclusion

Investing 1 Lakh for 6 months can be an obligation considering your family's financial conditions. Different short-term investment plans extend their financial benefits to help satisfy your financial requirements. You can compare them based on your needs and risk appetite. Being a short investment period, you must analyse and choose the best option to stay invested for the 6 months and reap maximum financial benefits.

L&C/Advt/2022/Dec/3364