What is the best way to invest ₹5 lakhs for 1 year with moderate returns?

Asked 28 Mar 2026·5432 views

I have saved ₹5 lakhs that I want to invest for exactly 1 year. I need the money for a property down payment after 12 months. I want to earn better returns than a savings account but need to preserve the capital since this is a committed amount. I have a moderate risk appetite. What investment options would give me the best risk-adjusted returns for a 1-year horizon?

Asked by Priya Sharma

2 Answers

For a 1-year committed amount with capital preservation and moderate returns, these are your best options ranked by risk-adjusted returns: (1) RBI Floating Rate Bonds — currently 8.05% annualized, fully safe, semi-annual interest payments. (2) Bank FDs with 1-year tenure — currently 6.8-7.2% for scheduled banks, use the FD ladder strategy. (3) Short-duration debt mutual funds — 7-8% returns historically but not guaranteed, slightly higher risk than FD. Avoid equity funds for a 1-year horizon as you can lose principal.

Answered by Anita Desai · 29 Mar 2026

Consider a Liquid Fund + Fixed Deposit combo: put ₹4.5 lakhs in a 1-year bank FD at 7% and ₹50,000 in a liquid fund for liquidity. When your FD matures, you will have approximately ₹5,31,500. Alternatively, use a 1-year corporate bond fund for 8-8.5% if you can tolerate slightly higher risk.

Answered by Rajesh Kumar · 2 Apr 2026