Investing 90 Lakhs: Best Options and Strategies

When considering an investment of 90 lakhs, it is crucial to have a clear understanding of your financial goals, risk tolerance, and investment time horizon. The best investment strategy for you will depend on these factors. In this article, we will explore the various options available, including equity, fixed income, hybrid funds, and other asset classes, to help you make an informed decision.

Understanding Your Financial Goals

The first question to ask yourself is how much you want your investment to earn over the next few years or decades. The concept of unlimited earnings, such as through trading or investing in high-potential stocks, is an ideal but not a realistic expectation in real life.

For instance, if you aim to grow your investment to 2 crores (20 million INR) in 10 years, you would need to take on a different approach compared to someone who aims to grow the same amount to 10 crores (100 million INR) in the same timeframe. The latter will require a higher risk with potentially higher returns, while the former is more balanced.

Concepts to Consider in Investment Decision-Making

Here are some key concepts to keep in mind:

Equity vs. Other Instruments: Equity historically has provided higher returns compared to other investment instruments, but it also comes with higher risk. This is particularly true in the short term, but the long-term benefits of equity investments can be substantial. Compounding: The longer you invest, the more your money will compound. This effect becomes even more pronounced over a long period. Risk Management: As you age, you should allocate a smaller portion of your investment to equities. It is essential to strike a balance between different asset classes, such as equity, debt, and gold, to manage risk effectively.

Current Market Conditions

Currently, the VIX (Volatility Index) is around 12, indicating relatively calm market conditions. While the market is not volatile, it's important to remember that volatility can change quickly. Therefore, a diversified investment approach remains crucial.

Investment Scenarios

Given the current market conditions, you have several options to consider. Here is one possible strategy:

Equity Funds: Allocate 50 lakhs (50%) to large-cap, mid-cap, and small-cap funds. For example: 10 lakhs each in flexicaps from major fund houses like ICICI, Axis, SBI, HDFC, Canara BIML, and Aditya Birla Sun Life. Invest 15 lakhs in three equity hybrid funds. Invest 15 lakhs in three debt hybrid funds.

Note: It is advisable to choose direct growth type schemes, which can only be purchased through mobile apps. Stick to the mobile apps of the mutual funds mentioned above to ensure a seamless investment process.

Tax Implications: When making investment decisions, consider the tax implications of your chosen schemes. For instance, equity-linked savings schemes (ELSS) can provide tax benefits under the Income Tax Act.

Conclusion

Investing 90 lakhs is a significant financial decision that requires careful consideration of your financial goals, risk tolerance, and investment horizon. By understanding the key concepts and strategies discussed in this article, you can make an informed choice that aligns with your long-term financial objectives.