Have you ever thought about how you would invest if you had funds to the tune of Rs. 10 lakhs at your disposal? Although investment is a preferential choice, there are utility funds in which you can invest and manage your money better while achieving sustained growth for long periods. If you have never invested and relied on traditional modes like fixed deposits and provident funds, you must try these ten effective ways to invest your money.

• Devise your investments based on your financial goals, considering profits and the associated risks.
• Investments like ELSS funds balance your investments and bring sustainability.
• For low-risk investments, PPFs and gold are good options to consider.

1) Emergency funds

The bolt from the blue can never be predicted. For the odd rainy day, you may choose to set aside money and avoid applying for loans. Ideally, you should set aside 3-6 times your monthly salary for utility funds such as emergency funds. This strategy can take care of you during patchy employment or a bad investment. Since these funds are allocated to liquid accounts, you have the opportunity to withdraw funds when you need them. You may view emergency funds as your defensive strategy as opposed to aggressive, money-making investments.

2) Short-term funds

Short-term utility funds refer to investments for periods ranging between 1 and 3 years. These are low-risk investments that generally do not ensure significant gains. However, if you are considering investing in Additional Tier-1 (AT1) bonds, you should understand the associated risks. Since holders are paid after all the debt-holders in AT1 bonds, the risk of coupon non-payment is always a factor.

3) Equity-linked savings scheme (ELSS)

One of the best utility funds that optimise growth by minimising risk and maximising profits, ELSS is a considerable upgrade on the regular equity savings fund. Although you will have to consent to a lock-in period of 3 years, rest assured that the risk from a volatile market will be somewhat neutralised. Moreover, under section 80C of the Income Tax Act, you can claim a tax deduction of up to Rs. 1.5 lakhs.

4) Gold

Investing in gold has few drawbacks other than the steep taxes that the government imposes on it. When used as an exchange-traded fund (ETF), gold can be an excellent hedge against market volatility. ETFs, by the way, help diversify your investments and minimise losses by associating low-return but secure investments.

5) Public provident fund (PPF)

Although not a great option if you are looking to make huge gains, PPFs can actually help you pay for planned future events, like marriages. However, keep in mind that PPFs are not liquid funds, and have a lock-in period of 15 years. PPF is one of the most suitable utility funds for you if you are risk-averse.

6) High-growth funds

These funds will best suit you if you are willing to take risks for long-term gains. These funds combine large, mid- and small-cap funds and optimise them to reach a sustainable return percentage.

7) Health insurance

Health insurance, apart from being essential in today’s world, can help you claim deductions u/s 80C. In other words, you will save on taxes, which will effectively add to the amount you can save during times of emergencies or health check-ups.

8) Term insurance

Term insurance is something you should consider if you have dependents to take care of in case of an unfortunate eventuality. Ideal term insurance should be 10 times your net annual income. Term insurance is largely seen as a preemptive investment that can pay off your loans without putting the burden on your family in case of your untimely death.

9) Repayment of debt

While planning to grow your wealth, weigh in the liabilities that you need to pay for. Experts recommend that you repay your debt whenever possible to ensure you maintain a good credit score, which can help with future loans and other credit products.

10) Save for retirement

The Rs. 10 lakh we began our discussion with must be saved and accumulated through wise investments. Nurture a habit of investing, as you can start with amounts as paltry as Rs. 1,000! With the National Pension Scheme (NPS), you can invest for the long term for a secure and happy retired life.

If you are looking for safe investment option, then you can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 8.60% p.a.