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What are the investment options in India for a newbie like me. I would like to start with 500,000 INR. (5 lacs / roughly $10K). Its for a long term. I don't need this amount for 10 years.

Low to medium risk with good returns is what I am looking for. I am a newbie in investment. Never invested in anything other than Bank Savings Account / CDs and LIC.

What are the options?

  • If you are looking for something with medium risk, you cannot guarantee good returns. Are you looking for fixed returns or are you looking to take a risk? – karancan Aug 28 '14 at 2:14
  • "risk" If I know it better, I would have answered it. But when you say risk, does that mean losing 50% of my money? Or 90% or just 10%? – Kint Kant Aug 28 '14 at 14:42
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I would suggest you to put your money in an FD for a year, and as soon as you get paid the interest, start investing that interest in a SIP(Systematic investment plan). This is your safest option but it will not give you a lot of returns. But I can guarantee that you will not lose your capital(Unless the economy fails as a whole, which is unlikely). For example: - you have 500000 rupees. If you put it in a fixed deposit for 1 year, you earn 46500 in interest(At 9% compounded quarterly). With this interest you can invest Rs.3875(46500/12) every month in an SIP for 12 months and also renew your FD, so that you can keep earning that interest.So at the end of 10 years, you will have 5 lacs in your FD and Rs. 4,18,500 in your SIP(Good funds usually make 13-16 % a year). Assuming your fund gives you 14%, you make: - 1.) 46500 at 14% for 9 years - 1,51,215 2.)8 years - 1,32,645 3.) 7 years - 1,16,355 4.) 6 years - 1,02,066 5.) 5 years - 89,531 6.) 4 years - 78,536 7.) 3 years - 68891 8.) 2 years 60,431 9.) 1 year - 53010

Total Maturity Value on SIP = Rs, 8,52,680 Principal on FD = Rs 5,00,000 Interest earned on 10th year = Rs. 46,500

Total = Rs. 13,99,180(14 lacs).

Please note: - Interest rates and rate of return on funds may vary. This figure can only be assumed if these rates stay the same.:).

Cheers!

  • 46500.. What about Tax on this amount, which is TDS? – Kint Kant Aug 28 '14 at 14:43
  • No TDS. You can fill a form called 15G, which exempts you from TDS for an amount of up to Rs 2,00,000 earned on interest every year.:). Bank officials usually do not tell you about this, but demand it! – user19894 Aug 28 '14 at 14:46
  • Wah! I did not know that. Thanks for the info! – Kint Kant Aug 28 '14 at 14:47
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    I will take 1 cookie for that.;) – user19894 Aug 28 '14 at 14:48
  • @user19894 even if we fill 15G, aren't we supposed to pay the tax on the interest? – jjk_charles Aug 28 '14 at 22:01

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