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5 smart ways to invest your surplus cash

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In the ever-evolving landscape of personal finance, making your surplus cash work for you is a key strategy for building long-term wealth. Whether you have received a bonus, or an inheritance, or have diligently saved over time, finding avenues to invest your surplus cash intelligently can pave the way for financial success.

But what is the ideal way to invest your surplus cash? Here, we will explore different avenues to invest your surplus cash and put your savings to work.

  • Table of contents
  1. Invest in mutual funds
  2. Take the SIP route
  3. Explore high-yield savings accounts
  4. Invest in dividend-paying stocks
  5. Invest in Fixed Deposits (FDs)

Invest in mutual funds

One of the most effective ways to deploy your surplus cash is to invest in mutual funds. These investment vehicles pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. Mutual funds offer several advantages, including professional fund management, diversification, and liquidity.

How to start:

  • Research and identify mutual funds that align with your financial goals and risk tolerance.

  • Consult with a financial advisor for personalized advice on fund selection.

Benefits of mutual funds

  • Diversification across various asset classes.

  • Professional management to optimise return potential.

  • Accessibility and liquidity for easy fund redemption.

Take the SIP route

A Systematic Investment Plan (SIP) allows you to invest a fixed amount regularly in mutual funds. This disciplined approach to investing ensures that you benefit from cost averaging and can be particularly suitable for individuals with surplus cash looking for a consistent investment strategy.

Steps to begin

  • Choose a suitable mutual fund according to your financial goals.

  • Set up an SIP to automate your investment at regular intervals.

Benefits of SIPs

  • A disciplined and systematic approach to investing.

  • Mitigation of market volatility through rupee-cost averaging.

Read Also: Benefits of Investing in SIP

Explore high-yield savings accounts

High-yield savings accounts are a good option for individuals looking for a safe and relatively low-risk way to invest surplus cash. These accounts typically offer higher interest rates compared to regular savings accounts, allowing your money to grow at a faster pace. However, they don’t offer as good returns as mutual funds.

Key considerations:

  • Compare interest rates and terms offered by different banks.

  • Ensure that the account is insured by Deposit Insurance and Credit Guarantee Corporation (DICGC) for added security.

Benefits of high-yield savings accounts:

  • Competitive interest rates for enhanced returns.

  • Easy access to funds without the risk associated with market fluctuations.

  • Safety through DICGC insurance up to the specified limit.

Read Also: Understanding Liquid Funds vs Regular Savings Accounts

Invest in Dividend-Paying stocks

Dividend-paying stocks provide an opportunity to generate both capital appreciation and regular income. Companies that distribute dividends often have a stable financial standing, making them suitable for long-term investors seeking a steady income stream.

Steps to consider:

  • Research and identify companies with a history of consistent dividends.

  • Diversify your stock portfolio to mitigate risk.

Benefits of dividend-paying stocks

  • Potential for capital appreciation and income generation..

  • Participation in the success of established, dividend-paying companies.

Invest in Fixed Deposits (FDs)

A fixed deposit is an investment option that allows individuals to invest a specific amount of money with a bank or financial institution for a predetermined period. During this period, the depositor earns interest at a fixed rate, which is generally higher than regular savings accounts.

Key considerations:

  • At the maturity of the fixed deposit, the principal amount is returned to the investor along with the accumulated interest. Moreover, there is also an option of periodic payout in fixed deposits.

  • It is important to note that fixed deposits may offer lower returns compared to other investment avenues such as mutual funds or stocks. Moreover, the returns from FDs may fail to outrun the march of inflation.

Advantages of FDs

  • One of the key advantages of fixed deposits is guaranteed returns. Unlike other investment options that are influenced by market fluctuations, the interest earned on fixed deposits remains constant throughout the tenure.

  • Fixed deposits provide individuals with a predictable income stream and can be a suitable for those seeking a secure and conservative approach to grow their savings.

Read Also: Fixed Deposits vs. Mutual Funds - Which is Better?


Investing surplus cash wisely is a crucial step towards building wealth over time. By diversifying your investments across different asset classes and employing a strategic approach, you can maximise the growth potential of your surplus funds. Remember to align your investment choices with your financial goals, risk tolerance, and time horizon for a well-rounded and successful wealth-building strategy.


What is the minimum amount required to start investing in mutual funds?
The minimum investment amount for mutual funds can vary depending on the fund and the fund house. It's advisable to check the specific requirements of the mutual fund you are interested in. Some funds may have a low minimum investment, making them accessible to a wide range of investors.

How do high-yield savings accounts differ from regular savings accounts?
High-yield savings accounts typically offer higher interest rates compared to traditional savings accounts. This allows account holders to earn more on their savings over time. While regular savings accounts may have lower interest rates, they are generally considered more liquid and suitable for short-term needs.

Is real estate a suitable investment option for someone with a lower risk tolerance?
Real estate investments can vary in risk, and they may not be suitable for everyone. While real estate has the potential for stable returns and income generation, it also comes with certain risks, such as market fluctuations and property management considerations. Individuals with lower risk tolerance may prefer to explore other investment options that align better with their comfort level.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.