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Where should I invest Rs 12 lakh for over five years?

Dhirendra Kumar gives a framework to go about equity investing

I have a horizon of over five years and an amount of Rs 12 lakh to invest. How and where should I invest it? I cannot invest in direct equity shares due to some office restrictions.
- Barjit Singh

Every investor should be guided by two things. One is the time horizon and that you have clearly stated - over five years and secondly, your experience in equity investing. If you have never invested in the market before, not even the tax-saving funds (ELSS funds), you should consider an aggressive hybrid fund (erstwhile balanced fund). They typically invest around 65 per cent in equity and the remaining in fixed income. So, because of this one third investment into fixed income, they are a steadier take on growth. More importantly, these funds don't crumble as compared to pure equity when the markets crash, so that's a good strategy to start with.

Moreover, another rule that one should follow is not to invest the entire amount in one go and spread it over 12 months. This way, you will be able to average your investment cost, and it will also be a great shock absorber against your behaviour. When you invest Rs 12 lakh in one go, something like a 20 per cent decline will make you lose your cool and then you would be in a hurry to get out of it at the earliest occasion when you break even. So this will also help you navigate the market and get a nice footing with confidence.

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