Where to Invest One Lakh Rupees for 6 Months?

It is difficult to find an investment avenue that has no risk and can provide adequate returns in a short period. Investors should always review their needs like corpus and monthly or lumpsum investment. Achieving the returns that can help you beat inflation is of utmost need. If you want to simply park idle money e.g. Rs 1 lakh for 6 months, explore the options mentioned herein.

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Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.

However, you must assess your financial needs and objectives before taking the final call. Analyze your monthly cash flow, decide the funds and then start investing.

Top Investment Options for Investing Rs 1 Lakh for 6 Months

Investing 1 lakh for a short term (7 days to 6 months or a year) can also attract the best interest rates or returns. Here are some of these options:

Recurring Deposits

Recurring deposits come with the flexibility to invest an amount every month. They can generate an average rate of return of 3.50% to 5.50% per year, with tenures stretching from 6 months to 10 years.

Features and benefits:
- Minimum amount that can be deposited is different for every bank. It only costs Rs 10.
- The minimum period is 6 months, and the maximum can go up to 10 years.
- It helps develop a habit of regular saving, especially for the salaried class.
- The rate of interest is equivalent to that of a fixed deposit.
- It offers the additional benefit of taking a loan against the deposit.
- It can be funded periodically through standing instructions.
Documents Required:
- KYC documentation
- Identity Proof
- Address Proof
- Passport Size photograph
- Filled in the application form
Eligibility Criteria:
- Any Individual
- Any government organization
- Any Corporate, company, proprietor, or commercial organization
- Any minor above 10 years of age
- Any minor below 10 years under the guardianship
Money Market Account

It is an interest-bearing account at a bank or a credit union. Also known as Money Market deposit accounts, money market accounts. They pay higher interest than the regular saving account.

It has the following advantages:
- Insurance Protection
- Higher rate of interest
- Debit Cards
- Check writing Privilege
Debt Instruments

A debt instrument provides a fixed rate of interest to the lender. It can be in paper or electronic form. They can provide fixed and higher returns, thereby proving to be better than fixed deposits. The following are some examples of common debt instruments:
- Debentures: They are securities that are not backed by any security. They are issued to raise medium and long-term funds.
- Bonds: They are issued by the government, central bank, or large companies. They ensure payment of fixed interest rates to the lender. The principal amount is paid back at the end of the term, just like the loans.
- Mortgage: This is a loan against a residential property. In case of failure, the property can be sold to recover the loan amount.
- Treasury Bills: Short-term debt instruments mature within a year and can be redeemed only at maturity.
Bank Fixed Deposits

Fixed Deposit is a convenient and safe way to help your savings grow. It has the following features and benefits:
- Attractive Interest rates
- Hassle-free opening of accounts
- Availability of short tenures
- More interest with reinvestment deposit
- Transfer of funds seamlessly between accounts
- Automatic rollover facility
- Compliant with the tax laws
- Multiple scheme options
- Minimum Investment Options
Post- Office Time Deposits

The Post Office Time Deposits have the following features:
- Multiple lock-in periods
- Income tax benefits
- Lucrative Returns
- Revision and determination of rates
- Transfer of rates to other accounts
- Payment of Interest
- Applicability of interest post maturity
- Low minimum deposit amount
- Premature withdrawal
Advantages:
- Unlimited accounts can be opened.
- Transferring accounts from one post office to another is possible. And can be withdrawn prematurely.
- They are safer than fixed deposits because the principal and interest are guaranteed by the government.
- The investments are flexible and can start from as low as Rs. 250/-.
- The nomination option is available.
- Section 80 C of the Income Tax Act, 1961 allows a tax deduction on term deposits of 5 years.
Large Cap Mutual Funds

Large-cap mutual funds invest 80% of the corpus in the top 100 companies by market capitalization. Here are some advantages:
- These companies are leaders in their business.
- They provide stable returns with low or minimal risks.
- Suitable for investors who do not wish to face excess volatility in the market.
- Gains are subject to 15% tax as per the Income Tax Act, 1961.
Corporate Deposits

Corporate Deposits are also called company fixed deposits, where you can invest your money for a fixed period at a fixed interest rate. NBFCs and other financial institutions offer them. They pay a much higher interest rate than a traditional bank deposit. Some examples include:
- Bajaj Finserv FD
- ICICI Home Finance FD
- HDFC Ltd FD
- PNB Housing FD
- Sundaram Finance Company FD
- Mahindra Finance FD Scheme

In Conclusion

Lumpsum investment is easy to make as there is no hassle of making recurring payments. However, it is imperative to examine every available alternative. Research and study before making the final decision. If you want to earn the best returns for investing 1 lakh for 6 months, you can consider mutual funds or debt instruments.

Always remember to consult a finance professional before making the final decision. Assess your risks and returns carefully to get required results.

FAQ's

What are the benefits of short-term investing?
Some benefits of short term investment are:
- Transparency
- High Flexibility
- High Liquidity
- Short duration of time
Which investment can provide the highest returns?

A large-cap mutual fund provides the highest return on investment.
What are the best SIP Plans for 6 months in India?
Ultra-short duration funds:
- SBI Magnum Ultra Short Duration fund
- Kotak Savings Fund
- ICICI Prudential Ultra Short Term fund
- Aditya Birla Sun Life Savings Fund
Low duration Funds:
- ICICI Prudential Savings Fund
- Kotak Low duration fund
- IDFC Low duration fund
- Invesco India Treasury Advantage Fund
- Axis Treasury Advantage Fund
Are Prepaid expenses short-term investments?

Yes, prepaid expenses are short-term investments.
Which investment option should you choose?
The following factors should influence your investment decision:
- Age: Young investors have lower responsibilities and can invest for a more extended period. Equity instruments with high risks are the ideal investment at this stage. As you grow older, safer investments like fixed and recurring deposits are generally preferable.
- Goal: The investment goals can be short-term or long-term. The amount of money you want to meet your future aims like marriage, buying a house or vacation will define your goal.
- Profile: Your earnings, along with your expenditure, will help you define your investment.
How are risks and returns related?

Risk and returns are related directly. Risk increases with an increase in the rate of return.
What are the many types of risks that come with investing?
There are several types of risks:
- Market-related risks
- Liquidity risks
- Concentration risks
- Credit risk
- Reinvestment risk
- Inflation risk
- Longevity risk
- Horizon risk
- Foreign Investment risk
How are investment returns taxed?

The profit is considered as a capital gain and is taxed accordingly. Besides, benefits are available under Section 80C of the Income Tax Act, 1961.
When should you start investing?

It is advisable to begin investing as soon as possible. The longer you invest, the more you gain.
What steps are there in the investment process?
The steps involved are:
- Understanding the financial needs
- The decision of asset allocation
- Strategic portfolio allocation
- Decision of asset allocation
- Evaluating the performance
What is diversification?

Diversification is the phenomenon of distributing funds in such a way that the risk and the rewards are balanced. The investment is divided into different assets to ensure the highest rewards.
Where to invest for good returns?
The investment options available include:
- Stock Market
- Investment Bonds
- Mutual Funds
- Savings accounts
- Physical Commodities
- Index Investing
Is gold a good investment?

Yes, gold acts as a protection against inflation.
What is a SIP account?

SIP account is a facility where you can use the auto-debit feature to invest periodically in mutual funds.

†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

Past 10 Years' annualised returns as on 01-01-2025

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%

¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.

**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).