For a 3-5 year investment horizon, a recommended allocation is 50% in short-term debt funds (e.g., ICICI Prudential Short Term Fund), 25% in corporate bond funds (e.g., HDFC Corporate Bond Fund), and 25% in Nifty 50 Index Mutual Funds, aiming for a blended return of approximately 10%.
"You will invest 50% in a debt mutual fund and since you have a three-year time horizon, you can invest it in a debt fund that will give a much better rate than an FD. So if the FD rate is 6.5%, you would like to get 8% without taking any risk, that is also great. So in this case, I am going to Coinpay, which is the mutual fund platform of Zerodha, and I am putting it in its dept section. ICICI Prudential Short Term Fund This in the last one year has given a rate of return of 8.81% and is near fixed. Then we will take a little more risk. 25% will be invested in another debt mutual fund. But this debt mutual fund will be a corporate bond fund. So these usually give better returns. So to give you another sense if I go by corporate bonds which is the biggest one. I am showing the biggest one, which one is it? HDFC has a corporate bond fund which has given 8.11% in the last 1 year. So 25% of that and then the remaining 25% because there is a period of three to five years. You can take the bare minimum risk that you can take in the stock market. Nifty 50 Index Mutual Funds."
