Where to Invest Five Lakhs for One Year to Get High Returns in 2024, India?


6 min read

Updated on Oct 28, 2023

Whenever you plan to invest an amount, you should do it wisely to get better returns and for future planning. If you are interested in knowing how to make the most out of INR 5 lakhs through long and short-term investment plans safe investments with high returns in India, here are the schemes you should consider.  

Regardless of the amount, planning an investment wisely is important. In this post, we are exploring certain options of savings and investments with INR 5 lakh for one year to achieve some of your investment goals.

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Things to note before Investing INR 5 lakh

There are some careful considerations required in terms of risks and benefits while investing INR 5 lakh for one year to get desired returns.

1. Consider your investment goals

Your investment goal implies what you are aiming to achieve from your particular investment, which help you decide where to invest 5 lakh for monthly income

2. Consider the involved risks

There is an amount of risk involved in almost all investment tools. It can be low or high depending on the scheme and the returns offered. You must choose the investment that balances your risk evaluation in terms of the rewards

3. Segregate the investment portfolio

It is very important to diversify the investment portfolio to manage the risks and to earn better returns

4. Consider the tax benefits

The tax saving plans and investments are good to consider as they help in saving a huge amount of tax. So, consider tax implications while looking for investment schemes to serve your investment purpose

5. Stay aware of market trends

The market is always changing with new products being introduced every now and then. Hence, it is good to stay informed about the latest in the market to make better decisions and required adjustments

Best Options of Investment with INR 5 lakh 

If you want to invest INR 5 lakh for a tenure of 1 year, you have many options in the market to choose from. Just remember to pick an option that makes you comfortable in terms of your financial goals, the amount of risk you want to take and the prospect of investment it offers.

Below are some good investment options available in India:

1. Fixed Deposits

When it comes to a safe and guaranteed return plan in India, you can trust the fixed deposit (FD) option. For investing INR 5 lakh for one year, you have to look for a bank that offers a high rate of interest on your one-year fixed deposit scheme. Generally, the FD interest rate varies within 5 to 7%. You can use a fixed deposit calculator to estimate the return you can earn from an FD scheme for your INR 5 lakh

2. Debt Mutual Funds

Another low-risk scheme is the debt mutual funds, which invest in instruments of fixed-income like that of government securities and corporate bonds etc. These funds are less in terms of risk as compared to equity mutual funds and high in terms of returns as compared to many other funds

3. Post Office Monthly Income Scheme (POMIS)

Yet another good investment option to invest 5 lakh is the POMIS. It is again a government-backed scheme giving you a fixed amount of return on your investment. This is definitely one of the best investment options for monthly income. However, the tenure of the plan is 5 years, while the rate of interest offered is around 7.4%. But this best options  for monthly income scheme is a safe and secured plan which you can consider to earn good returns

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4. Real Estate Investment Trusts (REITs)

Real estate is never out of demand. With the rising rate of properties, investing in real estate definitely offers the best return. You can simply follow the traditional way of buying property and rent it out to tenants or sell it after a few years to get an enhanced rate. You can also invest in real estate via REITs, where you can invest in multiple real estate assets with your single fund to earn better returns

5. Public Provident Fund (PPF)

If you can extend your tenure and invest in long-term plans, PPF would be the best option for you. This is a scheme that allows tax benefits and offers returns of around 7.1% per annum. However, the tenure of the term is 15 years but you don’t have to pay tax on the return amount.

6. Direct Equity

This is a highly risky option of investment that offers equally high returns. Under this scheme, you can invest in company stocks that are performing well and have growth potential. However, being risky you can’t invest your entire amount under this scheme and must work on a diversified portfolio

7. Gold

Gold is another option of investing your INR 5 lakh to earn better returns. Gold is considered an investment that never goes out of trend. To invest in gold, you can use gold ETFs or gold mutual funds. However, you must remember that the prices of gold vary as per market risks

Other investment options

As an investor, it is important to diversify your portfolio and invest your funds in multiple options to receive better returns as compared to investing the entire amount in one option. As a smart move, you may consider investing half of your savings in a stable investment plan offering assured return, while you may segregate the remaining amount in other alternative investment options.

There are several alternative options for investment that you may consider. Some of them are:

  • Commercial Real Estate
  • Corporate Bonds
  • Equity
  • Leasing Assets and
  • Inventory Finance, etc.

Most of the above-mentioned options offer a rate of interest that varies between 8% – 22%. Hence, they offer the best way to spread your investment profile and earn excellent returns.

Depending on the kind of risk-averse investor you are, you may plan to invest a minimum of 10% to 15% of your funds in bonds and debentures. These investment options are unpredictable as they depend on the market condition. Any sudden volatility in the market may impact the investment positively or negatively. Hence, the investor should be prepared to face any unexpected situation with these options.

So, the best practice is to invest the maximum portion of your fund in options offering assured returns, while you can set aside a minimum fund to invest in the alternative options that are market-linked. For secure and fixed returns, you may also invest in government bonds.

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To Conclude

You need to consider carefully while investing INR 5 lakhs for one year. Look out for the various options available and choose prudently. Keep an eye on the investment performance of various policies and make an informed decision. You can make use of goal-based investment calculators to check how much you can earn on your investment.

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FAQs: Where To Invest 5 Lakhs For 1 Year to Get High Returns?

Which investment offers the highest monthly returns?

Here are some options:
~ Post Office Monthly Income Scheme (POMIS)
~ Long-Term Government Bonds
~ Corporate Deposits
~ Monthly Income Plans
~ Equity Share Dividends etc.

How to make money from INR 5 lakhs?

Here are some ways to make money from INR 5 lakhs:
~ Use alternative investment options
~ Diversify your portfolio and invest in multiple schemes
~ Invest around 40% of savings in mutual funds
~ You can invest in Crypto currency as well

Can I invest in RD every month?

You can deposit a small fixed amount every month on a recurring deposit. At the time of maturity, the amount will be credited to your linked account.

What is a good rate of return on investment?

10% and above is considered a good rate of interest for long-term investments, especially in the stock market.

Where to invest INR 5 lakh for better returns?

Here are some best investment options in India in 2024:
1. Stocks
2. Mutual funds
3. Fixed deposits
4. Gold
5. Real estate
6. Bonds
7. Saving schemes
8. SIP mutual funds

What should be the tenure of investment in SIP?

A minimum tenure of 5 years is recommended to accumulate wealth through SIP.

What do you mean by a negative ROI?

When you incur a loss on the investment during the calculated period, it is said to be a negative ROI.

SIP vs. FD – Which is better?

SIP or Systematic Investment Plan offers better returns than FDs. However, SIPs are high-risk instruments.

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Jun 25, 2023
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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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