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How to invest a lump sum

If you are risk-averse investor, it's very important to invest in a manner that keeps anxiety at bay

I am 46. I have Rs 75 lakh and bank has promised me an interest of 9.5 per cent for a 5-10 year period. Can I invest that money elsewhere to generate about 15 per cent annualized returns over next 10 years. Or should I protect this capital at 9.5 per cent?
-Jaideep Chatterjee

If you are risk-averse investor, it's very important to invest in a manner that keeps anxiety at bay. We advise you to put 50 per cent of your money in a fixed deposit. The rest should be invested in an equity or a balanced fund. Balanced funds are treated like an equity investment. Do not invest the entire amount directly in a balanced fund. Systematically transfer it into the chosen scheme over a period of six months at least. This would ensure that your investments do not catch any high or low phase of the market.

Balanced funds is to provide capital growth via a mix of equity and debt: blend of growth and safety. The unique proposition of spreading investments among two broad asset classes is hard to find in other types of funds. The higher equity allocation to the tune of 65 per cent gives these funds the opportunity for high growth, while the debt component provides a cushion when the equity component fails to perform.

You can invest in two well rated balanced funds. Your overall allocation to fixed income will be about 60-70 per cent because half of your money will be in fixed deposits.



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