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Where should I invest a lump sum of Rs 10 lakh?

Depending on your experience, take some equity exposure, says Dhirendra Kumar

I have received a lump sum of Rs 10 lakh and would not need it in the next seven-eight years. Where should I invest it?
- Ranjana

A time frame of seven-eight years is a time when you should have some exposure to equity. Depending on your experience, you have two-three ways of having that equity exposure.

If you are a very scared kind of person, then go for an equity savings fund, which may give you a reasonably better return than fixed-income alternatives in seven-eight years. Plus, it will not create havoc in the interim and it will not fall freely if the market gets turbulent. Generally, I would suggest investing 50-50 per cent in equity and debt, as this allocation will give you a nice experience in seven-eight years. However, we don't have a 50/50 option.

As for someone who is a little venturesome, erstwhile balanced funds that are now aggressive hybrid funds are a good choice. Also, choose one fund but the important thing is that don't invest this Rs 10 lakh at one go. Rather, spread it over the next one year so that it will be at work in the next seven years.