Written by Priya N 19 Comments

Money makes money. If you want to make more money then you should know how to invest your money for maximum returns. You just could not spend money and expect to raise your savings. In order to raise your savings you need to know ways investing your money.

Every penny that you earn needs to be saved for your future. In this article, I tell you how to invest your 1 lakh rupees for better returns. It does not matter if the amount is more than Rs 100,000, like Rs 500,000 or Rs 1000,000. All the points are very simple and you don’t have to be a financial expert to understand them.

So these are following 10 ways to invest your Rs 100,000 for better returns.

1. Bank Fixed Deposits and Tax Saver Bank Fixed Deposits

The first two ways of investing your Rs 1 lakh could be bank fixed deposits and the tax saver bank fixed deposits.

Bank fixed deposits you all know about it. As you all know bank failures in India are very rare. Hence, you’re not going to lose your money. Moreover all rates are upfront so there are no hidden costs.

Yes, tax could affect your returns if you fall in high tax bracket. Therefore, the second point Tax Saver Bank fixed deposit comes in handy.

If you fall in high tax bracket then you could invest your money in Tax saver bank fixed deposits. You would get tax benefits on your return but only problem is that your money is locked in for at least 5 years.

So you can invest your money as per your income and the tax bracket you fall in.

• Expected Returns (Bank Fixed Deposits): 8%
• Expected Returns (Tax Saver Bank Fixed Deposits): 8.5%

2. Monthly Income Scheme

The second way to invest your 1 lakh rupees could be Monthly Income Scheme. It is very popular way to invest your money hence everybody is familiar with it.

Monthly Income Scheme comes in handy if you are looking for a way that gives you a constant income on monthly basis.

For example, monthly income scheme is run by Indian postal service, where you invest Rs 1 lac then your annual interest rate at 8.5% would be Rs 8500/- and monthly would be Rs 708.33/-

The interest income is taxable and the tenure is minimum 5 years. You can invest up to Rs 900,000/-

• Expected Returns: 8.5%

3. Savings Account

Savings account is yet another great way to invest your Rs 100,000 for better returns. If you are a young student or a person who wants to keep short term funds then savings account is the best way.

There is no maturity and the interest is tax free up to Rs 10,000/- and then charged according to the tax slab you fall in.

However, if you have a lot of savings then you have to have a fixed deposit account or some other way of savings that could give in more returns.

It is best for students and people with less income.

• Expected Returns: 4% to 7%
• Refer – Top 10 Banks for Saving Account in India

4. Public Provident Funds

Public Provident Funds are one of the safest ways investing your money. Although here you can invest more than Rs 100,000/-

The best part of it are returns, they are really great especially if you fall in 30% tax bracket. Yes, only thing is that you have to wait for minimum period of 15 years.

If you can do so then no other fixed income investment could match public provident funds. The invested amount is eligible for 80C deductions and the returns are absolutely tax free.

Hence, PPF is not just for investing Rs 1 lac but you can invest your entire life earning and get maximum returns.

• Expected Returns: 8.8%

5. Senior Citizens Saving Schemes

Senior Citizens Saving Schemes (SCSC) is also a great way to invest your Rs 100,000 for maximum returns. Especially if you are a senior citizen or you want to do for your parents then Senior Citizens Saving Schemes is the way to go for.

Here, you need to keep in mind that the interest is taxable and the investment amount is eligible for 80C deductions.

The minimum tenure of the savings is 5 years. You can compare senior citizen saving schemes with the monthly income scheme of the post office (and other schemes) for the interest rates.

6. Mutual Fund Schemes

The sixth best way to invest your Rs 100,000 could be the various mutual fund schemes. Especially, debt mutual funds, they are just like fixed maturity plans (discussed below) because returns are not fixed.

Here, it could be risky because you need to handle uncertainty. If you feel that you cannot handle the risk then you should not invest your money in any mutual fund schemes.

Only good thing about them is that they are very flexible to buy and sell otherwise you need to pay tax on capital gains and dividends.

If you can take risk then go for mutual fund schemes.

7. Fixed Maturity Plans

As I mentioned earlier fixed maturity plans cannot guarantee your returns because they are not fixed. Fixed maturity plans are the best for the people for higher tax bracket. It is because of fixed deposit like returns and tax advantages.

The advantage is that fixed maturity plans are tax efficient compared to fixed deposits. So if you have 1 lac rupees then fixed maturity plans may not suit you but if you raise your savings then it can really pay you higher dividends.

Moreover, the fixed deposits are insured up to Rs 1 lakhs however fixed maturity plans are not.

• Expected Returns: Not Fixed

8. Invest in Gold

Investing in gold could also be a great idea to get better returns for your Rs 100,000 invested. Some of the top ETF operational for more than 5 years are GS Gold BeES with return of 21.7%, UTI Gold Exchange Traded Fund with return of 21.5%, Quantum gold fund with return of 21.5%, Koaytak Gold Etf with return rates of 21.5% and Reliance Shares Gold Etf with return rate of 21.2%.

ETF or exchange trade funds are quite good because their costs are much lower than conventional mutual funds. Hence, if you plan to invest your money in Gold then go for ETFs only.

• Expected Returns: 21%% to 22%

9. Corporate NCD’s

Some of these investments are risky but they are worth mentioning here. Investing in Corporate NCD is very dangerous especially for companies which do not have steady profits.

It is like a lottery where you need to take a risk, hence investing Rs 100,000 into the Corporate NCD’s would not be worthwhile.

As far as taxation is concerned then they are charged according to your slab and capital gains that you make.

Although with Rs 1 lac you should not invest in corporate NCD’s but even if you do, you must examine and see the rating of a company given by different agencies.

Expected Returns: Higher than Fixed Deposits

10. Tax Free Bonds

The last point to invest your Rs 1 lac is the tax free bonds. Tax free bonds are secure way for getting returns on your investment but not as good as fixed deposits.

The only great thing about them is that there is not taxation on the returns.

Here, all it depends upon the interest rates. If you buy a bond from the stock market, bonds that are trading higher than their face value then you can make capital gains if the interest rate comes down.

You could buy and sell bonds anytime because there is no fixed time period.

• Expected Returns: 8% to 9%

So these were 10 ways to invest your Rs 100,000/- for maximum returns. You should see which of them suits you the best because every way is not for you.