Investment Plans for 10 Lakhs

Investing a huge sum of Rs. 10 Lakhs calls for some caution on your part. Amidst inflation and low interest rates of fixed-income deposits, investors need a strong contingency plan to beat the odds of a volatile market. Here’s how you can invest your 10 lakhs to grow your money while moderating the risk profile.

Investment Plans

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7.7 Crore

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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.

How to Invest 10 lakhs?

You can invest your savings in financial instruments per your risk appetite and goals. Low-risk investments include FDs, PPF, and capital guarantee solutions that offer low but consistent returns. On the other hand are high-risk investments that offer higher returns but at some risk to your money. Examples include mutual funds, unit-linked insurance plans (ULIPs), etc.

There is a way to balance out the risk and ensure consistent returns. This can be done by choosing a hybrid fund portfolio comprising of debt, money-market, and equity funds. Even if your equity portfolio is not doing well, you have debt and money-market funds to fall back on for returns.

Another option to benefit from the high returns of the market but distribute the risk would be to start an SIP (systematic investment plan). You invest a regular amount monthly in various investment funds. It is easier on the pocket and you do not have to risk all your money at once. ULIPs can also help you balance your portfolio through constant monitoring of the funds, unlimited switching between funds, and premium redirection.

Let’s look at each of these investment plans for 10 lakhs in more detail.

Low-risk Investment Plans

The amount you deposit in such plans will accrue interest of around 5-6% annually. On maturity, you will receive the bulk of the investment made along with the accumulated interest.

Fixed Deposit

You can invest the lump sum of Rs. 10 Lakhs in an FD account. You can choose to remain invested for up to 10 years. Interest rates for senior citizens are higher. Note that the interest rates also vary across banks.

You can easily estimate the returns using an FD calculator. Assuming an annual interest rate of 6%, an investment of 10 lakhs in an FD for a period of 10 years will grow to Rs. 17,90,848 including the accrued interest.

Monthly Schemes with Guaranteed Return

These are savings plans that also come with an insurance component. Such an investment plan for 10 lakhs guarantees you 100% of the sum invested plus bonuses (if any). For your understanding, an investment of Rs. 10 lakhs over a period of 10 years can earn you up to Rs. 13.4 Lakhs at maturity.
High-risk Investment Plans

These plans are dependent on market performance. The risk of the market underperforming is entirely borne by the investor. Investing a sum of 10 lakhs in such plans will earn you returns that can potentially beat inflation.

Lump Sum Mutual Funds

Mutual funds can be equity, debt, or hybrid depending on the risk profile of the investor. You can either split your 10 lakhs to diversity your portfolio to include a mix of every type or invest a lump sum in a particular fund. The returns also vary based on the market capitalization of the company invested in.

An investment of 10 lakhs in an equity mutual fund can earn you an average return of 11% to 12%. Debt funds on the other hand earn returns in the range of 7% to 7.5%.

Assuming an expected return rate of 11% per year on your lump sum investment of Rs. 10 lakhs, you stand to gain over Rs. 18.3 lakhs in 10 years’ time. This brings your total return on investment to Rs. 28.3 lakhs.

ULIP

ULIP or unit-linked insurance plans are investment cum insurance plans. The premium is split between the two to benefit from market returns along with a life cover for the investor.

A ULIP calculator will offer you an understanding of the returns from such investments. As an example, a one-time investment of Rs. 10 Lakhs at a return rate of 8% every year will grow your money to around Rs. 46.6 Lakhs in 20 years.
Goal-Based Investment Plans

Goal-based investment is another way to invest your 10 lakhs. Such plans require you to invest your money in plans that particularly cater to your goals, be it retirement planning, child planning, or wealth creation.

Pension Plan

Smart investors should definitely plan for their retirement in this age of inflation and uncertainty in the job market. It would be wise to park the whole of 10 lakhs towards this goal.

Pension plans can be guaranteed annuity plans or retirement ULIPs. Following your investment of 10 lakhs in a pension fund, there is a vesting period. During this period your money accumulates interest, bonuses, or returns from the market. When you reach retirement age, the insurer starts offering a monthly pension from the accumulated fund.

Child Plan

The cost of education is at an all-time high. Child planning should definitely be a priority if you have children or plan on having one. Most child plans come with triple benefits -
- An insurance benefit to compensate for the death of a parent
- Waiver of premiums by the insurer while keeping the policy in force till maturity
- Payout of the accumulated fund value at maturity from the child investment plan
An investment of Rs. 10 lakhs in a Capital Guarantee Solution can give you a lump sum payout of over Rs. 1 crore in 10 years assuming an interest rate of 10.7% every year. This money can be used towards your child’s college tuition, studies abroad, etc.

†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 01-12-2024

^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
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^^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).