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Business News/ Money / Personal Finance/  Have 5 lakh to invest in FY25? You may explore these investment opportunities
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Have ₹5 lakh to invest in FY25? You may explore these investment opportunities

One way to invest your money is to top up the existing portfolio, while another alternative is to diversify into multiple assets such as equity, debt and fixed income instruments by investing into multi-asset funds, suggests an expert.

Investors could explore the option of investing capital into a basket of stocks and mutual funds.Premium
Investors could explore the option of investing capital into a basket of stocks and mutual funds.

As the new financial year has just kicked off, investors of all hues would be doing some form of ‘stock taking’ of their investments. Certain securities are perhaps worth redeeming, they would discover, while exposure to others could be raised further in order to earn higher returns.

During this process of redeployment of funds, one would require more funds. Let us suppose you get access to an additional 5 lakh to invest in fiscal 2025, where all, do you think, this money could be invested? We spoke to a few experts to get a sense of the available investing opportunities for a lay investor early this fiscal. 

"The new financial year just started. This is an excellent opportunity to streamline your finances, invest in accordance with your financial goals, rectify any past financial mistakes, and, most importantly, remain focused and isciplined in your investments every year. If you have 5 L rupees you can invest this amount as per the time horizon required for your financial goal," says Preeti Zende, a Sebi-registered investment advisor and founder of Apna Dhan Financial Services.

We condense the learnings we drew from them here: 

Top-up and diversify

One expert suggests that one way to invest 5 lakh is to top up the existing portfolio, and another one is to diversify this sum into multiple assets such as equity, debt and fixed income instruments. This can be done by investing the capital into multi-asset funds.

“If you are an existing investor and you have 5 lakh to invest at the beginning of the year, there are two things you can do: one, add to the portfolio that you already have. And two, you can invest this money into multi-asset funds, which give you an exposure to multiple assets with just one fund. They give you exposure to more than 3 to 4 assets with just one fund," says Santosh Joseph, Founder, Refolio Investments and Germinate Investor Services.

ALSO READ: Don't sabotage your FY25 portfolio! Avoid these 5 mutual fund mistakes

However, if you are building a new portfolio then you can invest about 40 percent into fixed income, another 40 percent into equities, (flexi cap or a multi cap fund) and remaining 20 percent in multi asset funds to gain exposure to equity, fixed income, global stocks and precious metals such as gold, adds Joseph.

Plan I

2 lakh   Fixed income instruments
2 lakhFlexi or multi cap funds
1 lakh        Multi asset funds

Basket of stocks

Another financial expert Gaurav Goel, a Sebi-registered investment advisor (RIA) told Livemint that the hypothetical investor can invest this 5 lakh into a basket of stocks and mutual funds to hold them for a minimum of 3 to 5 years.

“I would ideally split this 5 lakh into seven stocks and three equity mutual funds (a total of 10 financial instruments) of 50,000 each. The stocks would include four large cap , two mid cap and one small cap, whereas three mutual funds would entail one large & mid cap fund, one flexi cap, and one mutual fund with global exposure," Goel says.

Plan II

2,00,000                 4 Large cap stocks of 50K each
1,00,000               2 Mid cap stocks of 50K each
50,000                  Small cap stock
50,000                  Large & mid cap mutual fund
50,000                Flexi cap fund
50,000                    Mutual fund with global exposure

He suggests that the investment can be made in a staggered way over the next 3-6 months to average out the cost. And as far as mutual funds are concerned, one can invest via systematic investment plans (SIPs).

“Diversify your investments so that one rotten egg (investment) doesn’t spoil your portfolio returns. And invest only in quality stocks with sound management and good fundamentals," he adds.

Plan III

Preeti Zende says one can invest in different investment instruments based on time horizon. For instance, you can lock the money in a fixed deposit of arbitrage funds if you would need this money in a short period of time.

Short term: If you want to use this amount as a downpayment for a car or going for a vacation or doing a house renovation in a couple of years then you should stick with the fixed deposit or Arbitrage funds that offer better taxation, she says.

Mid-term: If you want to invest for your mid-term goals then you can add hybrid equity or balanced funds along with debt funds.

Long-term: If you want to invest this amount for long-term goals then invest 60-65% of this amount in Index funds, Flexicap funds, and mid-cap funds and the remaining amount can be invested in Gilt funds. For Gold exposure SGB are also good option, currently when gold prices are skyrocketing you can invest in SGB through secondary market, Ms Zende adds.

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Published: 07 Apr 2024, 12:29 PM IST
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