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Where should I invest to accumulate Rs 10 lakh in three years?

Dhirendra Kumar sheds light on the approach to invest for the short term

I want to accumulate a corpus of Rs 10 lakh through SIPs over the next three years. Would you suggest an allocation of 60 per cent in equity savings funds and 40 per cent in large-cap funds?
- Ankitbhai Jabavani

If this accumulation is for a non-negotiable goal, you should invest in a fixed-income fund. A three-year period is not good enough to invest in equity simply because the market is unpredictable in such a short period. There have been many three years in which someone doing an SIP would have lost money. So if somebody might have invested Rs 10,000 a month, i.e., Rs 3.6 lakh in total, the worth could be just Rs 2.5 lakh at the end of three years, which is undesirable.

If it is a negotiable goal, you can hope that equity will perform well in three years and go ahead. However, for an all-equity portfolio, the minimum time frame one should keep in mind is five years to err on the side of caution.

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