Home>Questions>I want to invest Rs 1 Lakh lumpsum for 5 years, where can I invest?

I want to invest Rs 1 Lakh lumpsum for 5 years, where can I invest?

I am ready to take the risk. Please suggest me a portfolio for investing 1 lakh.

Pijush Kanti Biswas

For investing a lumpsum amount ₹1 Lakh over 5 years, which is a long-term investment plan, large cap funds are best option. They are safe and give good return to your investment.

Reason being:

  • In large cap fund, a large portion of investment is done in companies with large market capitalization. Large cap are big, well established companies of the equity market. These companies are strong, reputable and trustworthy.
  • Investment in large cap fund is best suited for investors with low risk appetite and for investment of lumpsum amount.
  • Provide good stability in returns on investment for longer duration investments. For large-cap funds, you can expect to get returns in the range of 12-15%,
  • Liquidity of shares of large cap fund is very high because they are reputed, mature and firmly established players in the market.
  • They are highly followed in stock market and usually tapped by institutional investors.

Some examples of popular large cap Funds for 2017:

Always remember, there is no guaranteed return on investment in mutual and it’s all depend on market. The figure mentioned above are based on historical data observed.

Happy Investing!

Arpit Chandak

If you are planning to invest lump sum amount for 5 years and the same time ready to take the risk, we would suggest you invest in mid-cap equity mutual funds.

Equity mutual fund scheme can be considered the appropriate mutual fund scheme to invest lump sum amount in India. These funds have the potential to give higher returns if invested over a longer period of time.

On the basis of the market cap, equity mutual funds can be divided into following categories:

Large Cap funds: When the mutual fund invests a large portion of the capital in companies having large market capitalization, these funds are called Large Cap equity funds. These funds provide sustainable returns and stability to investors. These funds are considered ideal if the investment period is 4 years approximately. 

Mid- Cap funds: Here, the mutual fund invests in stocks of mid-size companies. These funds provide moderate risk to investors. These funds can be considered if the investment period is greater than 5 years.

Small Cap funds: In these types of funds, fund manager invests the major portion of the investors' money in stocks of companies having low market capitalization. These funds can be considered if the investment period is greater than 6 years.

Multi-Cap funds: These funds are used to minimize the risk and diversify the investment. In these funds, capital is invested in companies across different sectors.

Depending on the risk appetite and time period, an investor can choose among these equity mutual fund schemes. However, risk and return go hand in hand with most of the financial instruments.

Another way to invest lump sum amount is through STP (Systematic Transfer Plan). For investing a lump sum amount, you always want to invest at the lowest price. But knowing the current price is high or low is challenging. STP is an automated way of transferring money from one mutual fund to another. You can transfer the money from the debt funds to equity funds through STP.

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