Investment Strategies: How to Save 5 Lacs in 5 years?

D was curious to know,

How much should I save/invest each month if I want to build a corpus of 5 lacs (Rs 500,000) in 5 years? Also, in which financial instrument should I save/invest this monthly amount?

I’d recommend saving Rs 7,000 each month in a 5-year Recurring Deposit at the Post Office. An absolutely safe and disciplined approach to building the targeted corpus. At current interest rates (the interest rate is locked once you open the deposit), the maturity amount would be 5.1 lacs (Rs 510,230) (slightly higher than the target).

What do you think? Can you suggest an alternate investment strategy?

6 thoughts on “Investment Strategies: How to Save 5 Lacs in 5 years?

  1. Hi Vinaya,

    Certainly this can be counted as amongst the safest strategy for reaching the goal. However, someone with medium risk appetite can also look at have some exposure to diversified mutual fund. So both mutual fund and post office RD can be used in conjunction.

    What do you think ?


  2. Ashutosh,

    Personally, I find five-years too short a window to invest in a diversified mutual fund. But if I had to pick, probably I’d opt for a balanced/hybrid mutual fund — one that’s higher on the debt side.

    How does that sound?

  3. I feel investment in PPF is wise. Tax benefits. Interest is tax free. Can vary one’s contribution. Can draw only once in a year from saver point of view. Risk free.

  4. I always have a bias towards equity :)

    Still I would say, investing in Balanced Mutual Fund is better than putting money in RD.

    PS: Just wondering why wasn’t I auto subscribed to the replies :(

  5. Hi Vinaya,

    The RD option looks conservative for someone who is below 35 yrs of age. I would consider the option of investing in a blue chip(s) for the same duration.


Leave a Reply