How do I deploy the proceeds of my investments in MIS?
My post office monthly income scheme (MIS), in which I had invested ₹50,000 five years ago, matured in August. I don’t know the final value of my investment. Where should I invest this amount upon withdrawal?
—Name withheld on request
The decision to invest the amount you will receive from your MIS should ideally be based on your objectives and the time horizon for which you would like to invest.
Many investors tend to invest randomly which can result in their money not making the most from the investments. This can happen due to a mismatch in the goal horizon and the investment avenue. For example, if you can invest and hold it for 10 years, but you invest in debt-oriented avenues like MIS or debt mutual funds, then you could lose out on the opportunity to generate higher returns on your investment despite having a longer horizon. If your debt-oriented investment has given you 8% returns per annum (p.a.) on an investment of ₹50,000, then at the end of 10 years, the value of your investment would be ₹1.07 lakh. Had you invested the same amount in equities, and if the rate of return was12% p.a., then you would have got ₹1.55 lakh at the end of 10 years. This difference will keep increasing as the amount goes higher.
Similarly, if you want the invested money back in two years, then investing in equity oriented options may not be the best option. Because, in the short run, stock markets can be volatile and if your investment is caught in the middle of any crisis. then the growth rate along with capital can also get impacted. Hence for a shorter horizon, you can look at debt-oriented options. Hence, you should first define the objective and time period for the investment. If you would like to invest for a longer period,
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