Where should I invest Rs 8 lakh considering the current market scenario?

I have about Rs 8 lakh with me which I don't need for an immediate requirement. What would you suggest given the present situation - should I invest in the stock market, mutual fund, land or just leave this amount in an FD? What do you think is the best employment for my money?
- Deshpande

With your money, you'll be able to average your investment in an equity fund which will help you reduce your risk and have a diversified portfolio. Land requires a different kind of commitment as the ticket size is different. It is worth considering if you are presented with a special situation or a special opportunity that looks like a bargain. Still, it has its complexity of dealing with it.

My suggestion would be to consider a conservative equity fund or maybe an aggressive hybrid fund for five years and more. So that in case of a crumbling market, you will not be greatly disappointed. And over this period, I think it will turn out to give a reasonable return. Today, the fixed income rate has come down so drastically that it is nothing meaningful even if you get lucky with the highest possible return. We are in a very unusual situation where inflation has started moving up, while interest rates have come down to a very low level. So there is a possibility that your money will grow or earn interest but will not beat inflation, which effectively translates into the value of your money going down.

So I would say, take a more modest chance and take it with all the precautions, which means, average your investment. Don't invest all your money in one go and invest in a conservative equity-oriented mutual fund or an aggressive hybrid fund.

This article was originally published on August 11, 2021.