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Business News/ Money / Personal Finance/  How do I deploy the proceeds of my investments in MIS?
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How do I deploy the proceeds of my investments in MIS?

The decision to invest the amount you will receive from your MIS should ideally be based on your objectives and the time horizon for which you would like to invest.

Many investors tend to invest randomly which can result in their money not making the most from the investments. (iStockphoto)Premium
Many investors tend to invest randomly which can result in their money not making the most from the investments. (iStockphoto)

My post office monthly income scheme (MIS), in which I had invested 50,000 five years ago, matured in August. I don’t know the final value of my investment. Where should I invest this amount upon withdrawal?

—Name withheld on request

The decision to invest the amount you will receive from your MIS should ideally be based on your objectives and the time horizon for which you would like to invest.

Many investors tend to invest randomly which can result in their money not making the most from the investments. This can happen due to a mismatch in the goal horizon and the investment avenue. For example, if you can invest and hold it for 10 years, but you invest in debt-oriented avenues like MIS or debt mutual funds, then you could lose out on the opportunity to generate higher returns on your investment despite having a longer horizon. If your debt-oriented investment has given you 8% returns per annum (p.a.) on an investment of 50,000, then at the end of 10 years, the value of your investment would be 1.07 lakh. Had you invested the same amount in equities, and if the rate of return was12% p.a., then you would have got 1.55 lakh at the end of 10 years. This difference will keep increasing as the amount goes higher.

Similarly, if you want the invested money back in two years, then investing in equity oriented options may not be the best option. Because, in the short run, stock markets can be volatile and if your investment is caught in the middle of any crisis. then the growth rate along with capital can also get impacted. Hence for a shorter horizon, you can look at debt-oriented options. Hence, you should first define the objective and time period for the investment. If you would like to invest for a longer period, say, 5 years and above, then you can consider investing in equity-oriented mutual funds.

Mutual fundsstr managed by experienced fund managers who are much better equipped to build your portfolio, monitor regularly and generate higher returns. It is easier for you to focus on your personal and professional life while this money continues to be managed by expert fund managers. If the time horizon is between 2 amd 5 years, then you can consider Balanced Advantage Funds where the money gets invested in a blend of equity and debt. And for less than two years, you can invest in short and mid-duration debt funds.

Harshad Chetanwala is co-founder, MyWealthGrowth.

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Published: 18 Oct 2023, 10:33 PM IST
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