Where to Invest 10 Lakh Rupees
Four experts on the best opportunities for Indian investors as global uncertainty reigns.
Keep it simple and play the long game — that’s the advice of India’s wealth experts when it comes to prospering during the current market volatility.
Over the past decade, Indian investors have witnessed the greatest bull run in the country’s history. It resulted in the nation’s stock markets growing by three times to $4.4 trillion, while mutual fund assets expanded more than six times to nearly $776 billion as of March 2025.
But since September, India’s markets have been whipsawed by concerns over whether the country can sustain its lofty economic growth rate. Indexes like the Nifty 50 and Smallcap 100 have gone from posting double digit declines from all-time highs, to being back within shooting distance of them in a matter of months.
And as US President Donald Trump rewrites the global trade rulebook and tensions simmer between nuclear armed arch-rivals India and Pakistan, the nation’s equities could face new headwinds. Prime Minister Narendra Modi has many competing priorities to balance — from attracting foreign capital and encouraging local investment to creating manufacturing jobs and addressing national security challenges.
Amid the confusion and noise, Bloomberg asked financial experts where Indians should invest 10 lakh rupees. With the country experiencing somewhat of an investment awakening, and investors plowing money into everything from stocks to real estate, this will be the first in a series where we talk regularly to top market watchers on where India’s growing investor class should be putting their money — and why.
For those who like to invest using exchange-traded funds or mutual funds, Bloomberg Intelligence emerging-market strategy analyst Nitin Chanduka provides proxies for the experts’ ideas.
We also asked each expert for a less conventional take on how they’d spend 10 lakh rupees — the wildcard.
THE IDEA
Wherever you are in your investment journey, you need to secure your today before investing for the future. Once you have money equal to six months of your monthly expenses in a bank fixed deposit or low-risk debt fund, health insurance and life insurance policies for your dependents — which I call the three seatbelts — you should start investing for the future.
For long-term investing — more than seven years on the investing horizon — it’s best to use equity funds. For new investors, starting with a simple index fund is a good idea. The logic is this: the probability of one stock going to zero is real, but the probability of all 30 or 50 stocks in an index fund hitting zero on a particular day is extremely unlikely.
Even for high-net worth investors, keeping it simple rather than trying to invest in all sorts of experiments and exotic products is sensible. What we can predict is the long-term index return that, for India, should be in the range of 12% to 14% a year if taken over a 10-year period.
Think of a thali. It is a plate with different food types — carbohydrates, proteins, fats, fiber — and each food type is needed for the body. Your investment pie is the same. You need a mix of asset types. Fixed deposits and debt funds give you liquidity, safety and predictability. Equity products give you growth.
You need allocations to both debt and equity. Split those 10 lakh rupees into baskets of horizons. For the investing horizon of more than seven years, go with equity funds. Within equity, you need further diversification for both growth and risk mitigation.
Start with allocating 50% to a large-cap index fund on a bellwether such as the Sensex or NIFTY50 and 25% each in a mid- and small-cap index fund. Ideally choose a large fund that has a low expense ratio and go for a direct plan if you are indexing. Savvy investors can choose active funds rather than the indexing route, but they will either need to get advice or do the work before choosing funds. Going with last year’s winner is a strategy that is sure to lose.
As your net worth increases and once you have secured enough money in the 50-25-25 portfolio, you can shave off 5% to 10% from the large-cap fund to invest in higher risk areas that you might have a view on.
But keep the number of funds down to 10 or fewer. I often find that investors have 15 to 20 mutual funds because they want to diversify their holdings or they are chasing some story.
THE IDEA
In the current market scenario, an investor could have an asset allocation as follows: 25% to 45% in fixed income; up to 35% in large caps; up to 10% in gold and the same in silver.
There’s a large amount of uncertainty globally on account of tariffs and slowing growth and locally there is a rate-cutting cycle underway. All this points to keeping fixed income as the majority of your portfolio.
Investors could enter fixed income funds, which have 3 to 7 year durations, to take advantage of the rate-cut cycle. If the investor wants their timeframe to be two years, they can consider a new product: Income Advantage. These funds invest 65% in debt and 35% in equity arbitrage. Investors choose them for tax advantages, but the funds have to be held for two years.
When foreign investors turn into full-scale buyers, they generally buy large-cap stocks first. Large caps are seen as safer than mid- and small-cap stocks. Valuations have also corrected.
Gold has rallied as a hedge to uncertainty, inflation and central bank buying, while silver has many industrial uses. Also, the gold-silver ratio is near highs and may correct a bit. ETFs can be used to buy both.
THE IDEA
The first thing is to figure out your risk profile. My litmus test is simple: if you bought at the start of the Covid-19 pandemic — say in March or April — you are an aggressive investor. If you didn’t make any moves but continued your systematic investment plan, your risk profile is average. If you sold during this period, you’re conservative. Be honest with yourself.
The second step is to identify your investment objectives. If you are young, you might want to save for a holiday, a car in three years, a house in 10 to 15 years and for retirement. Each of these goals can be addressed through different asset classes.
Once you have identified your risk profile and investment objectives, follow the asset allocation dharma: short-term goals should be met with safe assets and long-term goals with higher-return, higher-risk assets.. At this time, I recommend debt allocation in long-duration mutual funds, commodities allocation to be gold and silver and for equity allocation I prefer large caps. You should also keep some cash to buy during a market correction and if the markets fall, you can liquidate the debt/duration funds to invest in equity.
Passive funds typically underperform the index slightly due to transaction costs. In active funds, there is a possibility that a good fund manager will outperform the index. An investor needs a combination of active and passive in their portfolio, and should not go all in on one type of fund.
Since there are hundreds of asset managers and thousands of schemes, my advice is to go with the fund house you trust and speak to an investment adviser or distributor. If you can’t afford an adviser, especially for young investors who may be overwhelmed with the number of options, simply buy an asset allocator fund. The fund manager allocates and rebalances your portfolio based on market conditions.
President Trump has unleashed a worldwide reset of trade policies in one shot. If inflation shoots up in the US, it may enter a recession which means that as the biggest engine of global growth, it will impact other countries.
In India, between 2021 and 2023, 93% of household financial savings went into bank deposits, insurance, small savings, pensions and currency and only 7% flowed to mutual funds and stocks. Most households have seen the value of savings eroded by inflation. We still have a long way to go to educate people about the benefits of mutual fund investments.
THE IDEA
I view India as a high-growth market over the longer term, which means you can benefit from opportunities without taking excessive risks or exposure to undue volatility. India’s large banks look stable and attractive and I don’t anticipate any major increase in their credit costs in the next five years.
As India’s economy grows, it’s possible to spot the likely beneficiaries. Companies are rejigging their supply chains and the opportunity is large. Manufacturing in India at the moment isn’t massive, so any incremental growth from this low base will be huge. In the next two decades, you may see this sector become bigger and bigger.
I would put half the rupees into equity funds, which pool investors’ money to invest in a diversified portfolio of stocks. To manage the risk, I would split it in a ratio of 2:1:1 across funds that focus on large companies, mid-sized ones and small firms that offer higher growth prospects. I would also commit 1 lakh rupees to a fund where the manager has discretion to change the amount invested across different market capitalizations, known as a flexi-cap fund.
I would put about 4 lakh rupees in debt funds, which invest in fixed income assets such as bonds, and about 1 lakh rupees in gold. Debt provides stable income, while gold is a hedge against inflation. REITS are beginning to gain popularity in India and would be part of the debt allocation.
I’m also keen on defense. India is deploying a lot of effort in the industry, and the opening up of private sector investments makes this interesting.
I am negative on commodities, fast moving consumer goods companies and firms at this point of time.
I’m a fund manager, so I advocate going with the best in class. The danger is in specific sector stocks that can fall, which makes me wary of funds that invest in a particular area.
I would probably invest in Bitcoin. If inflation is high and takes time to come under control it could be a good hedge. I would invest in gold bars that I can hold for now in this uncertain environment. And I would buy a BYD Co. electric car.
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