Investing ₹1 lakh wisely can set the foundation for your financial growth, whether your goal is wealth creation, emergency funds, or short-term objectives. With a range of investment options available, selecting the right one lakh investment plan depends on your risk appetite, investment horizon, and financial goals. Below, we explore the best investment plans, including Fixed Deposits, SIP plans, and other short-term investment plan options.
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Investment Plans
Generate wealthEarn 1 Cr# in maturity with Zero LTCG tax¶
Double tax savings^On premiums (under 80C) and on maturity (under
10(10D))
Short-term investment plans are designed for those seeking returns within 6 months to 5 years. These plans are ideal for building emergency funds, meeting near-term goals, or avoiding premature withdrawals from long-term investments. The focus is on capital protection and moderate returns, making them a key component of a balanced investment plan.
Top Investment Options for 1 Lakh
Investment Option
Risk Level
Tenure
Expected Returns*
Suitable For
Fixed Deposit
Low
6 months – 10 years
6–8%
Conservative, short-term goals
Recurring Deposit
Low
6 months – 5 years
6–7%
Regular savers
SIP in Mutual Funds
Medium – High
1 year – long term
10–15%
Growth-oriented investors
ULIPs
Medium
Long term
10-15% (Market-linked)
Insurance investment
Pension Plans
Low – Medium
Long term
Guaranteed/Market
Retirement planning
Corporate Fixed Deposits
Medium
1 – 5 years
7–9%
Higher returns with some risk
Money Market Account
Low
Flexible
4–6%
Short-term parking
Public Provident Fund
Low
15 years
7.10%
Long-term tax-saving
Stocks
High
Long term
Variable
High risk, high return
Gold / Sovereign Gold Bonds
Medium
Flexible
Market-linked
Inflation hedge
*Returns are indicative and subject to market conditions.
Fixed Deposit (FD)
A fixed deposit is a popular and secure one lakh investment plan, especially for risk-averse investors. You can invest a lump sum for a tenure ranging from 6 months to 10 years. FDs offer:
Guaranteed returns unaffected by market fluctuations
Flexible tenures to match your goals
Option for monthly, quarterly, or cumulative interest payouts
For example, investing ₹1 lakh at an interest rate of 7.25% p.a. can yield approximately ₹601 per month if you opt for monthly interest payouts. This makes FDs one of the best investment options for those seeking stability and regular income.
Recurring Deposit (RD)
Recurring Deposits allow you to invest a fixed amount regularly for a chosen tenure (6 months to 5 years). RDs are suitable for conservative investors wanting liquidity, safety, and moderate returns. Linking your savings account ensures disciplined investing, making RD a reliable short term investment plan.
Systematic Investment Plan (SIP) in Mutual Funds
SIP plans offer a disciplined approach to investing in mutual funds by allowing you to invest a fixed amount at regular intervals. SIPs benefit from the power of compounding and rupee cost averaging. Historically, mutual funds via SIPs have delivered average returns of 10–12% annually, sometimes higher in certain schemes.
If you can invest ₹1 lakh per month through SIP, you could potentially accumulate ₹1 crore in about 5 years and 10 months at a 12% annual return. Even with a one-time investment of ₹1 lakh, SIPs remain among the best investment plans for 1 year or longer, depending on the scheme's risk and return profile.
Unit Linked Insurance Plans (ULIPs)
ULIPs combine investment and insurance, allowing you to invest in equity, debt, or balanced funds while providing life cover. They are suitable for investors seeking long-term wealth creation with insurance benefits. ULIPs involve some charges but offer tax benefits under Section 80C.
Pension Plans
Pension plans are designed to provide a steady income post-retirement. Investing ₹1 lakh in a pension plan can help build a retirement corpus with tax benefits and guaranteed or market-linked returns depending on the plan type.
Money Market Account
Money Market Accounts, offered by banks and credit unions, are a safe investment option for conservative investors. They provide higher interest rates than savings accounts, with the added convenience of easy withdrawals, cheque writing, and debit card facilities. However, transaction limits may apply.
Corporate Fixed Deposits
Corporate FDs, offered by NBFCs and financial institutions, typically offer higher interest rates compared to traditional bank FDs. They are suitable for those seeking guaranteed returns but willing to accept slightly higher risk due to the issuer's creditworthiness.
Stock Market Investments
Direct equity investments carry high risk but also the potential for high returns. A diversified portfolio and a long-term investment are recommended to mitigate volatility.
Public Provident Fund (PPF)
The Public Provident Fund (PPF) is a government-backed long-term investment scheme that offers a safe and attractive way to accumulate wealth over time. It has a mandatory lock-in period of 15 years, after which investors can either withdraw the entire corpus or extend the tenure in blocks of 5 years, allowing continued tax-free growth. The current PPF rate is 7.10% p.a.
Gold and Sovereign Gold Bonds
Gold investments serve as a hedge against inflation and currency fluctuations. Sovereign Gold Bonds offer interest along with capital appreciation and are a good addition to a diversified portfolio.
Things to Keep in Mind While Investing ₹1 Lakh
Define Your Financial Goals:
Clarify whether you want short-term gains, long-term wealth creation, or retirement planning.
Assess Risk Tolerance:
Choose investment options aligned with your comfort level regarding market volatility and capital safety.
Investment Horizon:
Short-term investment plans (up to 1 year) favor fixed deposits, money market accounts, or debt funds, while SIPs and ULIPs suit longer horizons.
Diversification:
Avoid putting all ₹1 lakh into a single option. Diversify across fixed income and equity-linked instruments to balance risk and returns.
Tax Implications:
Consider tax-saving instruments like ELSS mutual funds, PPF, and ULIPs to optimize your post-tax returns.
Liquidity Needs:
Ensure some portion of your investment is easily accessible for emergencies.
Review Regularly:
Monitor and rebalance your portfolio based on market conditions and changing financial goals.
Professional Advice:
Seek guidance from financial advisors to tailor your investment plan effectively.
Conclusion
A ₹1 lakh investment plan can be tailored to your needs by balancing risk, return, and liquidity. Whether you choose a fixed deposit for safety, an SIP plan for growth, or a recurring deposit for disciplined savings, aligning your investment option with your financial goals is key. Always assess your risk profile and investment horizon before making a decision, and consult a financial advisor if needed.
FAQs
Can I invest ₹1 lakh in a Systematic Investment Plan (SIP)?
Yes, you can start an SIP with as low as ₹500 per month and invest ₹1 lakh either as a lump sum or in installments.
Is Fixed Deposit a good option for short-term investment?
Yes, FDs offer guaranteed returns and are ideal for short-term investments up to 1 year.
What is the lock-in period for PPF?
PPF has a lock-in period of 15 years, with options to extend in 5-year blocks.
Are ULIPs suitable for ₹1 lakh investment?
Yes, ULIPs combine insurance and investment, suitable for long-term wealth creation with some risk.
Can I withdraw money from PPF before maturity?
Partial withdrawals are allowed from the 7th year onwards. Loans can be taken between the 3rd and 6th year.
What is the minimum amount to open a Fixed Deposit?
Most banks allow you to open an FD with as low as ₹1,000.
˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.
Past 10 Years' annualised returns as on 01-08-2025
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).
Generate wealth Earn 1 Cr# in maturity with Zero LTCG tax¶
Double tax savings^ On premiums (under 80C) and on maturity (under 10(10D))
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