Where and How to Invest 1 Lakh Rupees: Top 7 Investment Options for Investing ₹1 Lakh for 6 Months in India, 2024


9 min read

Updated on Dec 29, 2023

Where and How to Invest 1 Lakh Rupees in India for 6 Months

To lead a wholesome and steady life, you need to make your investments meticulously. Every person should choose the right financial platforms to get sufficient returns in a shorter period. But not all one time investment plans would offer you the best return. Thus, you should thoroughly assess your needs like corpus or monthly investments before making any investments. Your investment returns will not only strengthen your financial portfolio but also will help you to combat inflation. In this article, we are going to explain where to invest 1 lakh rupees for 6 months and the best investment options for investing 1 lakh in India for short term.

What do you Understand by a Short-Term Plan of Investment?

If an investment is done for a short duration of below 5 years, it is termed a short-term investment plan. These investments are mostly done to take care of some short-term goals or emergencies. Short-term savings can be as short as 6 months or as long as 5 years.

Below are some reasons why you should consider investing in the best investment options for the short term:

  • It lets you overcome an emergency easily
  • A short-term investment can aid in avoiding breaking your investments for the long term during unforeseen situations
  • You can achieve your financial goals of the near future with short-term investments
  • Serves with decent returns

How to choose a good investment option?

When it comes to choosing a good investment plan, you can have several options to select from. However, to pick one from among them might be a difficult task. Hence, you have to analyse factors to understand the effectiveness of varied investment plans available in the market.  Here, you need to consider things like flexibility allowed by the investment plan along with the tax benefits that it allows. In addition, you also must consider the investment as per your monetary goals aligned with your future.

Below are some factors that influences the investment/savings decision of investors:

  • The investment should allow the liberty to withdraw fund anytime
  • It should allow the flexibility to initiate investment with any amount
  • The investment option should be safe with good-return scheme
  • It should have custom investment period
  • The plan should come with tax saving and other benefits

Depending on particular needs of different individuals they can decide on the significant factors that serve their purpose for a long-term investment. Also, it is important to remember that you may not get every aspect you are looking at in a single plan.  All investment plans come with certain advantages as well as some drawbacks. So, you may have to choose a plan that comes in between and fulfil your needs aptly.

Type of Investment Options

There are various investment options available for an investor to choose from. However, the selection of an investment should be done in a way that fits the needs and goals of investors.

So, considering the possible uses of investment plans, they can be broadly divided into three types, such as;

  • Investment Plans for Growth
  • Investment Plans that are Safe, and
  • Investment plans with Income Return Option
Growth Plans Safe Plans Income Return Plans
They are long term plans They are medium term plans They are Low-risk plans
Can be volatile Ensure safety of capital Allows regular income – monthly, quarterly
Egs. Mutual Fund, NPS, PPF etc. FDs, Guaranteed Savings plan etc. Pension plans, SCSS etc.

7 Best Investment Options 2024 to Invest Rs 1 Lakh For 6 Months in India

Before investing a single penny, don’t forget to weigh your financial needs and objectives. Once your fund is decided (Like Rs. 1 lakh), then you can start looking for the best investment options in India for short term. Here is how to invest and where to invest 1 lakh for short term

1. Recurring Deposits – (interest rate 3-5 to 6.5%)

If you want the best option to invest money for 6 months, then this could be your ideal choice as this type of option offers flexibility in terms of investment. You may get a 3.50% to 5.50% average return every year. The policy tenure period could be 6 months inventment plan to 10 years.

Benefits of Recurring Deposits –

  • The minimum amount is not fixed for all banks. Your minimum investment could be Rs. 10
  • The minimum and maximum investment periods are 6 months and 10 years respectively
  • The best investment options for a salaried person due to this regular saving option
  • The rate of interest could be the same as a fixed deposit
  • You can take a loan against the deposit
  • Documents required (KYC, Identity and address proof, passport-size photographs and the duly filled application form)
  • An individual from any walk of life, be it one working in  government as well as corporate or commercial organizations can go for this investment option

Documents required

  • PAN card
  • Aadhaar card
  • Passport
  • Voter ID card
  • Government ID card
  • Driving licence
  • Photo ration card
  • Senior citizen ID card

Eligibility criteria 

  • The applicant should be a resident Indian
  • The minimum deposit should be INR 500 per month and multiples of INR 100 thereafter
  • RD can range between 6 months to 10 years

Also Read: RD Interest Rate In Post Office

2. Money Market Account

These are also called Money Market Deposit accounts which are interest-bearing accounts at a bank or a credit union. By opening this type of account, you may get a higher interest amount than a normal savings account.

Benefits of Money Market Account –

  • This type of account enables you to invest money for short term
  • You will get insurance protection
  • You will get a higher rate of interest
  • You may get debit cards against your account

Documents Required

KYC compliance documents like PAN, Aadhaar, Passport, Driver’s license, Voter’s ID Card, and passport-size photographs

Eligibility Criteria

  • Individuals can invest through instruments like mutual funds
  • These are short-term investments ranging from 3 months to a year

Also Read: How To Save TDS on Salary

3. Debt Instruments

This type of investment option offers a fixed rate of interest to customers. It could be either paper or digital form. They offer higher returns as compared to fixed deposits. Some common debt instrument examples are,

  • Debentures: These securities are not supported by any security. They are allotted to raise medium and long-term funds.
  • Bonds: These can only be issued by the government, central bank, or big companies. They offer fixed interest rates to the moneylender. You will get the principal amount once the tenure period is completed.
  • Mortgage: You will get a loan against your residential property. If you can’t make payments, the property will be seized or sold out to repay the loan amount.
  • Treasury Bills: This is one of the best investment options in India for short term. These short-term debt instruments mature within a year and you can only claim the amount after the maturation.

Documents Required

KYC compliance documents like PAN, Aadhaar, Passport, Driver’s license, Voter’s ID Card, and passport-size photographs

Eligibility Criteria

  • Individuals can invest with a minimum investment amount of INR 5 lakh initially and its multiples thereafter
  • These are short-term investments ranging from one year to three years
  • All Indian residents are eligible

4. Bank Fixed Deposits – (interest rate 3-8%)

This is one of the best investment options for beginners as it will enhance your savings gradually. Since this type of investment offers security, hence they are the best investment options in India for short term. You will get a rate of interest between 3%-7% for FDs per annum.

Some Highlights and Advantages of Bank Fixed Deposits –

  • Offer lucrative interest rates to customers
  • You can easily open accounts at your nearest bank
  • This investment option is ideal for short-term periods
  • You can get more interest amount with a reinvestment deposit
  • You can comfortably transfer funds between accounts
  • Go with the tax laws
  • You may get multifarious scheme options and minimum investment options

Also Read: 1 Crore FD Interest Per Month

5. Post-office Time Deposits

This is one of the popular investment options for senior citizens. This scheme comes up with the below-mentioned features,

  • The scheme offers you various lock-in periods as per your choice
  • You are eligible for income tax benefits
  • You may get astonishing returns
  • Revision and determination of rates are also offered
  • The scheme provides you with a minimum deposit amount
  • You can select premature withdrawal in case of urgency

Advantages of Post-office Time Deposits – 

  • You may open various accounts as per your needs
  • You can transfer your one post office account to another comfortably.
  • The funds can be withdrawn prematurely
  • This type of investment offers more security as the principal and interest amounts are guaranteed by the government.
  • The scheme offers you a flexible option. You may start with Rs. 250
  • You are free to select your nominee
  • Section 80 C of the Income Tax Act, 1961 is applicable for a tax deduction if the tenure period is a minimum of 5 years

Documents required

To invest in a POTD account, you would mandatorily require KYC documents like:

  • PAN card
  • Aadhaar card

Eligibility criteria 

  • The investor has to be an Indian citizen of 18 years and above
  • Minor of 10 years and above can also open a POTD account under the supervision of parents/legal guardian

Also Read: Post Office Online Payment

6. Corporate Deposits 

These are known as company fixed deposits where you may invest your hard-earned money for a particular period at a fixed interest rate. This type of scheme is only offered by NBFCs and other financial institutions. You may get a higher interest rate than a normal bank deposit. Some examples are,

  • HDFC Ltd FD
  • Bajaj Finserv FD
  • PNB Housing FD
  • Sundaram Finance Company FD
  • Mahindra Finance FD Scheme

Documents required

  • PAN card
  • Aadhaar card
  • Passport
  • Driving Licence
  • Voter ID

Eligibility criteria 

  • To apply for a corporate deposit, an individual requires a valid ID approved by the government of India
  • You also require address proof such as an Aadhaar card, Passport, Voter ID, etc.

Also Read: Best policy for girl child

7. Large-cap mutual funds

This type of scheme is one of the best investment ideas in India as it invests 80% of the corpus in the eminent 100 companies by market capitalization. Some popular advantages that you may get from this investment option are,

  • These companies have unprecedented market reputations in their respective fields
  • The risks are minimal as they offer stable returns
  • These investment options are ideal for those who want to avoid extreme volatility in the stock market

Documents required

  • KYC compliance documents like
  • PAN card
  • Aadhaar card
  • Passport
  • DL
  • Voter’s ID card
  • For minors, a third-party declaration is also required
  • Canceled blank cheque

Eligibility criteria 

  • The investor should be an Indian citizen
  • The period of a Large Cap Mutual Fund ranges between 5 to 10 years
  • Anyone who wants a diverse financial portfolio can invest in this fund

If you are thinking about where to invest Rs.1 lakh for 6 months, then the aforementioned information will help you to make a wise investment decision. But before investing any money, do thorough market research and try to enhance your knowledge of investments. To get the best results, you may consult with a professional finance person who will guide you on your investments.

Documents Required to buy Investment Plans in India

Below are the required documents – 

  • Documents Required
  • KYC documentation
  • Identity Proof
  • Address Proof
  • Passport Size photograph
  • Application form (duly filled)

Eligibility Criteria to Buy Investment Plans in India

Below are the eligibility criteria – 

  • Any Indian Citizen
  • Any government organization
  • Corporate firms, commercial organizations, etc.
  • Minors above the age of 10 years
  • Minors below the age of 10 years (under their guardian)

Also Read: Government investment schemes

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FAQs: Top Investment Options for Investing ₹1 Lakh for 6 Months India, 2024

I have 1 lakh rupees, where to invest 1 lakh?

If you have 1 lac rupees and are looking for a profitable opportunity or a best way to invest 1 lakh for faster returns, here are the top 5 avenues to consider:

1. Public Provident Fund
2. Sovereign Gold Bonds
3. Equity Mutual Funds
4. Gold Exchange-Traded Funds
5. Government Bonds

Which mutual fund is best for 1 lakh investment?

The following mutual funds are considered the best if you’re interested in investing Rs. 1 lakh:

Quant Tax Plan Growth Option Direct Plan
Axis Bluechip Fund Growth
SBI Technology Opportunities Fund Direct-Growth
Aditya Birla Sun Life Tax Relief 96 Growth
ICICI Prudential Technology Fund Growth

Which investments have the highest returns?

To earn the best returns on your investments, you may consider the following options:

Fixed Maturity Plans
Saving Account
Treasury Bills
Short-Term and Ultra Short-Term Funds
Gold Investment
Liquid Funds
Equity Linked Saving Schemes (ELSS)

What is the #1 safest investment?

Public Provident Funds or PPFs are by far considered the safest bet in terms of investment with high returns as well.

Name a plan that allows greater returns?

Plans like large-cap mutual funds allow highest return on investment.

How are risks and returns related?

Risks are directly related to returns. If a plan allows greater return, it also poses greater risks. So, the amount of risk increases with an increase in return.

What kind of risks come with investments?

Risks that come with investments are:
Risks related to Market
Liquidity risks
Risk of Credit
Risk of Inflation
Risk of Reinvestment
Risk in Foreign Investment etc.

Is gold a good investment?

Yes, gold allows safety against inflation. Hence, it is a good investment option.

What is the right time to start investing?

It is better to start investing as early as possible because you get an extended time period. Also, the longer duration you invest, the better gain you get.

Are there any benefits of short-term investment?

Yes, there are many benefits of short-term investment, such as:

# They are transparent in terms of returns
# They are highly flexible investment plans
# They are also highly liquid and so can be withdrawn anytime
# You can get the returns within a short duration of time

Which SIP Plans are best in India for 6 months duration?

Below are some ultra-short duration SIP funds:

# SBI Magnum Ultra Short Duration fund
# Kotak Savings Fund
# ICICI Prudential Ultra Short-Term fund
# Aditya Birla Sun Life Savings Fund

Below are short-duration SIP funds:

# ICICI Prudential Savings Fund
# Axis Treasury Advantage Fund
# IDFC Low duration fund
# Kotak Low duration fund
# Invesco India Treasury Advantage Fund

Can prepaid expenses be termed as short-term investments?

Yes, prepaid expenses are short-term investments.

Are investment returns taxed? How?

Investment risks are directly related to investment returns. So, when risk rises the rate of return also increases.

What are the steps of an investment process?

Follow the below steps for an investment process:

# Understand your monetary needs
# Decide about allocating asset
# Decide on the strategic allocation of the portfolio
# Decide on asset allocation
# Performance Evaluation

What is diversification?

In diversification, investment is divided into different assets. So, diversification is the act of distributing funds in a way that you get balanced risks and rewards. This ensures the highest rewards in diversification.

What is a SIP account?

A SIP account is one you can use the auto-debit feature to invest periodically in mutual funds.

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Jul 13, 2022
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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