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

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

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

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

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

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.

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)