How to invest Rs 10 lakh for 10 years?

How to invest Rs 10 lakh for 10 years? - Dipak Barot

Making a decision on where to invest a large sum of money can be overwhelming. To help you understand what to consider, we've provided a guide to investing Rs 10 lakh for 10 years.

Objective
The first step is to determine your investment goals. Are you looking to achieve a specific outcome or are you open to adjusting your expectations based on market conditions? If your goal is negotiable, you can afford to take on more risk, as long as you have a solid understanding of the potential consequences. If your goal is non-negotiable, it's important to have a systematic transfer plan in place to move your investments into less volatile debt options three years prior to realising your goal.

Portfolio allocation
The size of your investment portfolio will also impact the level of risk you're willing to take on. If your Rs 10 lakh makes up a significant portion of your overall portfolio, you may want to allocate a portion to debt investments. On the other hand, if this investment is a relatively small part of your portfolio, you may be more comfortable taking on more risk by investing in equity.

Risk appetite
Your personal risk tolerance is also an important factor to consider. If you have an aggressive approach to investing and are willing to tolerate short to medium term losses, you may want to allocate more of your investment to equity. However, if market fluctuations cause you undue stress, you may want to allocate a larger portion to debt investments.

Systematic investment
Finally, consider investing your Rs 10 lakh over a period of six to 36 months, instead of all at once. This approach, known as systematic investment, can reduce your overall risk by spreading your investment over time, as well as help you to average your investment cost.

So that's how you can invest Rs 10 lakh. You can also discover the right funds for your investment goals with Value Research's Portfolio Planner. Simply input your investment amount and time horizon, and get a list of expert-recommended funds tailored to your specific needs.

Investment recommendation
For a 10-year investment horizon and a willingness to tolerate market volatility, consider investing in a flexi-cap fund. For those who want to take on some risk, but want to mitigate the volatility that comes with pure equity funds, aggressive hybrid funds may be a good choice. These funds have a significant exposure to equity and a portion invested in debt, helping to cushion the impact of any market downturns.

View our recommended list of mutual funds handpicked by our seasoned team of researchers.