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Can You Earn 24% P.A. On Rs 1 Crore?

Last updated on: October 27, 2023 15:09 IST
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Is it a good idea to give Rs 1 crore to someone who promises you a return of 24% per annum, wonders financial advisor P V Subramanyam.

Illustration: Uttam Ghosh/

"Subra," someone I know asked, "I have a portfolio of debt and equity investments. They are in pension plan, equity funds, some bonds and some bond funds. I have been getting decent returns but I wish to turbo charge the returns. Could you please suggest some more investments to boost my returns?

"A person I know in Bengaluru, who is into alcohol and construction business wants to take Rs 1 crore from me and give me 24% per annum interest payable on a monthly basis. Do you think it is a good idea to do so?"

My answer: When you ask for a suggestion, do not 'lead' me into saying yes. That is bound to create stress in our relationship.

If this person had asked me, 'Should I invest in a bitcoin or a real estate fund?' I could have answered far more easily.

So this is what I said.

I am sure you will find many advisors who will have many ideas on how to make your money grow by leaps and bounds, but you have come to the wrong place.

I'm confident those advisors will have no trouble coming up with a long list of alternative investments for you to invest in. It will range from commodities, precious metals, hedge funds, private equity, alternate investment funds, PMS, tax lien certificates, structured settlements, mining rights, investing in funds abroad, etc.


Let me answer your questions one by one.

Your equity mutual funds have done well, almost brilliantly, but if you compare it to some fund which has given 39% or 43% in 2017, that is a poor comparison. Worse, it is wrong.

Lending money to a person whom you do not know well -- that too Rs 1 crore -- is a high risk proposition and it could get you into trouble. What if that person does not make the interest payment on time? Even worse, what if he were to default and somebody came after him? Too risky, methinks!

Of course, there will be many advisors who will claim that they can skilfully integrate any number of alternate investments into your portfolio and manage it too. Maybe after doing some research on their track record, you'll be able to identify the ones who have managed it in the past, for a fee of course. Some of these portfolio management services are really expensive.

I think the majority of investors -- by which I mean people with a portfolio of Rs 5 crore -- are better off just sticking to a broadly diversified portfolio of shares and debt.

Your current portfolio needs some little tweaking, that is all. You have a portfolio, but you aren't pleased with the returns you're earning. I find that puzzling.

In the nearly nine years since the market hit bottom in the financial crisis and almost all funds have given good returns.

In fact, returns have been so strong since 2009 that I seriously wonder how long this party can last. I am feeling like Cinderella but the party hall has no wall clock.

I feel we are at 10.45, if not at 11.45, which is a great time to leave the party for many of the participants who think they can time the market. And while bond funds have not fared well in the past four months, they have not done too badly in the overall period.

It makes me wonder if the only way you can feel better is if you reset your expectations.

  • Do you have personal finance related questions? Ask's Money Gurus HERE.

P V Subramanyam is a chartered accountant with more than four decades of experience in the field of personal finance and blogs at

Disclaimer: This advisory is meant for information purposes only. Any use of the information and related decisions of the recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.

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