Where I would invest Rs 1 crore

ome of our readers have displayed tremendous investment acumen on what they would have done had they made Rs 10 million in the market.

Others have come up with some radical suggestions. 

All these are responses to our earlier story on how you can make a crore and lose it.

Making a crore is undoubtedly a challenge. But utilising it effectively is another.

Here is what some of our readers would do:

I will divide the entire amount into four parts: 30% + 30% + 30% + 10%.

I would then invest 30% in stocks. This amount will be further allocated thus:

10% - Blue-chip index stocks
10% - Mid-caps with good business modules, management and profits
10% - New stories like Petronet lNG and Power Trading Corporation

I would invest the next 30% in real estate.

I would spend half the amount on buying an apartment in a posh locality. And the other half in buying a big plot of land on the outskirts of the city. The value of this piece of land would rise as the city expands.

Another 30% would go into very safe investments: National Savings Certificate, Public Provident Fund, LIC policies, bank deposits and Government of India bonds are some options.

The last 10% would be spent on diamond-studded gold and platinum jewellery.

- Anjan Bora

I would work out the following strategy:

1. Sell all the stocks.

2. Put the entire amount in my savings account with a nationalised bank. Sounds stupid, I know!

3. Wait for the present government in the Centre to fall.

4. Then I would wait for the Sensex to drop by around 700-800 points.

5. I would then re-enter the market with the entire amount and wait another year for this amount to double to Rs 2 crore (Rs 20 million).

What would I have done then?

Gone back to Point 2 and probably continued in the same way.

- Anand Sathyamoorthy

First things first. I would immediately say, "Goodbye!" to my boss.

With 15% of the amount, I would go on a world tour with my fiancée and donate around 10% to charity. 

Then I would invest the rest:

25% - equities
25% - buy a decent apartment
25% - bank deposit

- S K Bhoopathy

I would remain invested with the initial seed amount of Rs 30 lakh (Rs 3 million).

I would sell shares worth Rs 70 lakh (Rs 7 million), which is the profit made. This amount would then be invested in various fixed income investments.

I would plough the interest I earn back into the stock market and the cycle would continue.

- Sanjay

I would resort to three courses of action:

1. Pre-pay my existing loan to a level where it matches my existing fixed return investments.

2. Another part would have been invested in a home to earn a rental income as well as avail of asset appreciation. If necessary, I would even finance part of this purchase by taking a home loan. But I would ensure the Equated Monthly Installment is 60% or less than the rental income.

3. Assuming I am left with, say, 40% to 50% of the original Rs 1 crore (Rs 10 million), I would reallocate the balance into the market. This time, my target would be Rs 2 crore (Rs 20 million).

I would continue this cycle over the next 10 years and hope to make enough to retire at 45.

- Prasanna Singh

If my investment of Rs 30 lakh (3 million) grew to Rs 1 crore (10 million), I would cash out (assuming this is a long-term capital gain and I don't have to pay tax on it!).

There are three things I would do with the Rs 70 lakh (Rs 7 million) profit:

1. Donate 10% of the amount to a known charitable trust.

2. Put Rs 6 lakh (Rs 600,000) in the Post Office Monthly Income Scheme and earn a return of Rs 4,000 per month.

3. Assuming I already own the house that I stay in or that I stay with my parents, I would invest around Rs 57 lakh (Rs 5.7 million) in property. This, in developing areas of the city, not in posh localities.

I can assume a rental income of approximately Rs 12,500 to Rs 15,000 per month and a capital appreciation of around 5% to 10% per annum.

Obviously, in the booming real estate scenario, the appreciation can be much more. But I am averaging it out over a 10 to 15-year span and basing this on my experience in South Bangalore.

What would I do with the original Rs 30 lakh (Rs 3 million)?

Reinvest Rs 21 lakh (Rs 2.1 million) in shares or mutual funds. Though I would probably wait for a bear phase when prices drop to re-enter the market.

Rs 9 lakh (Rs 900,000) would go into National Savings Certificate and fixed deposits.

By doing this, I generate:

~ Monthly cash flow of Rs 16,500 to Rs 19,000 (rent + interest from the MIS). So, per annum, I earn Rs 198,000 to Rs 228,000.

~ Appreciation of Rs 285,000 to Rs 500,000 annually on my property.

~ The fixed deposit would get me 6% and NSC gives me 10% interest annually. So an average of 8% on Rs 9 lakh (Rs 900,000) is Rs 72,000 as interest per annum.

~ Assuming an average of 12% per annum on my equity investment of Rs 21 lakh (Rs 2.1 million), I would earn Rs 252,000 per annum.

- Aravind Krishna

To view earlier responses, please read What would I do with Rs 1 crore.

Illustration: Dominic Xavier

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