What is the most profitable way to invest ₹ 10000 per month?

I have received this question via email from one of my readers. He is 25 years old and working with IT company and earning a decent salary. He can spare Rs. 10000/month after spending on all his monthly needs. Let’s have a look at the Most profitable way to invest Rs. 10000 per month.

My Answer: Glad that you want to invest at the age of 25. I am assuming that you have some knowledge about investing. I am also assuming that you want to invest 10k/month for the long term.

There are many ways you can invest this 10k/month. I would suggest you invest in mutual funds. There are a variety of the funds available in the market. Choose the one which suits your requirement and time horizon.

Below chart shows the comparison between different investment avenues. It is clearly coming out that equity is the best investment which gives you around 15% returns. Yes! there is risk associated with the stock market. But in the long run, the risk is getting narrow.

investment avenues

To validate the statement we have checked the performance of the stock market at different intervals. We have checked Sensex’s performance since its inception and here is what we found:

stock market trend

If you check the 1-year performance there are 12 out of 36 years where returns are negative. For 3 years return same is 6 out of 34 years. For 5 and 7 years investment, the probability of loss is only 3 times out of 30 years. This clearly indicates that as investment time increases the probability of loss is decreasing. There is a straight co-relation of investment period and returns. Based on the above historical data we can conclude that if you invest in stocks or mutual fund for a minimum of 10 years, then there is no chance of losing your money. In the period mentioned above, large-cap has delivered at least 12% and mid-cap has delivered 20% returns.

Now you know how much time you should stay invested to gain good returns. Also, please do not assume that all your shares/funds will give you same returns. You need to select your stocks based on your holding capacity(horizon).

Earlier you start, better it is. You have enough time to multiply your corpus since you are too young. The power of compounding works in your favor if you stay invested for say 10 years.

your idle portfolio should have a mix of large cap / small cap and balance fund.

Open a demat account if you don’t have one. I would suggest you to open an account with Zerodha. It is a best-discounted broker in India. One account can work as a universal account for mutual funds, direct equity, currency market etc. Their fees are also reasonable, they are charging ₹ 300/ year as a maintenance charge. Their brokerage is lowest in the industry.

Here are the best funds within their respective category. Choose the 1–2 funds from each category and you are good to go.

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