Supporting everyone's personal finance journey

Where to invest additional money every month?

13 Dec 2021 - Contact Sayan Sircar
6 mins read

If you can increase the amount of monthly investments, where should you invest next?

Where to invest additional money every month?

Table of Contents


Once an investor has been investing for some time, there will come a time when their income will increase, and they will have an additional monthly amount they can invest. Alternatively, if you are investing ₹50,000/month, you could wonder where people who have ₹ two lakhs or ₹ five lakhs a month invest. This post deals with both situations.

We have already discussed where to invest spare money available one time here: I have ₹ five lakhs in the bank. What do I do now to get the best returns?. This post deals with the general case where you have more money to invest monthly.

Where to invest extra money monthly

Many investors in this situation start with the question, which is a variation of “Which fund should I choose now?”. But, instead, the investor is recommended to go back to the basics and check if they are investing as per their goals.

Investment amount should be as per goals

If goals are not set, please do so now by following this process step by step: I have just started earning and do not know a lot of finance. What now?

Once you have goals that are set, follow these steps:

The planner will give two outputs:

Choosing investments

Once you have the SIP amounts, you can choose equity and debt funds from here: Which funds should I invest in?

Suppose you already have existing funds where you are investing. In that case, you should evaluate how each fund is doing based on this framework: Are you checking the performance of your funds regularly?.

If you are happy with your funds, invest the extra monthly amount in the same funds as per the SIP amounts specified by the planner. However, if you switch to new funds, start the SIPs in the new funds and stop SIPs in the old funds.

A few things to keep in mind:

  • If you have investments in Regular funds, you should exit soon: How to switch from regular to direct funds?
  • When you sell funds, you have to pay tax which you can calculate and minimize based on the applicable taxation rules: How is tax calculated on selling shares/MFs and how do to do tax harvesting?
  • Do not start investing in a similar fund for the same goal. If you have XYZ LargeCap fund, do not start investing in ABC LargeCap fund while staying invested in XYZ LargeCap. Having multiple funds in the same category negates the outperformance of one fund with the underperformance of the other(s). This way, the portfolio ends up close to index fund returns less the high TER of active funds. In such cases, just switch after calculating tax impact
  • Do not create clutter by adding too many funds. It isn’t easy to track and manage. Some investors prefer to add similar funds from different AMCs for different goals, but that is more relevant beyond a certain portfolio value in crores. It is simpler to stay invested in the same existing funds if they are good enough. This article discusses this concept in more detail: Should the same funds and folios be chosen for different goals?

Based on this discussion, our recommendation will be to stick to the same funds irrespective of how much the investment amount increases with time: going from ₹20,000 to ₹2 lakhs/month does not require different investments. You can create a very simple portfolio with not more than 2-3 funds that is easy to track and manage without losing out anything that can be got just with 10-12 funds or more. As we have discussed before, asset allocation and rebalancing as per goals is more important in portfolio construction than looking for the best fund to invest: What should be the Asset Allocation for your goals?

Our new Goal-based investing tool will help you to create and manage all of your goals in one place. Click the image below to get access:

Arthgyaan creates a system for reaching your financial goals by sharing simple, actionable advice backed by research and analysis.

Your email address will not be shared with anyone and you can unsubscribe anytime.

More investment choices could lead to more mistakes

An accredited or sophisticated investor is an investor with a special status under financial regulation laws. The definition of an accredited investor, and the consequences of being classified as such, vary between countries. - Wikipedia

In India, SEBI norms released in August 2021 say that you can be an accredited investor if your net worth is ₹7.5cr or more or have an annual income of ₹2cr or more. More details are available here.

The financial regulator in each country restricts which investor can invest in what securities. For example, to invest in PMS schemes, you need to invest at least ₹ 50 lakhs. The rationale here is that with increasing ticket size, comes an increasing appreciation of risk associated with such investments.

Investors aspiring to reach accredited status should clearly understand the balance of the potential of getting higher returns vs the higher risk in alternative investments. One quick way of ascertaining the suitability of such assets is to check if the investment manager’s interest is aligned with that of the investor. A typical 2/20 fee structure (annual 2% of AuM and 20% profits) leaves the entire downside for the investor since the AuM fee is paid out irrespective of fund performance. Before investing, the investor should check if the advertised returns, post fees, beat a humble Nifty index fund. Having more money to invest does not necessarily lead to becoming a sophisticated investor. It also increases the risk of making bigger mistakes.

If you liked this article, consider subscribing to new posts by email by filling the form below.

Previous and Next articles:

Latest articles:

Topics you will like:

Asset Allocation (18) Basics (5) Behaviour (10) Budgeting (9) Calculator (10) Children (6) Choosing Investments (24) FAQ (2) FIRE (8) Gold (6) House Purchase (10) Insurance (6) Life Stages (2) Loans (10) NPS (3) NRI (3) News (5) Portfolio Construction (27) Portfolio Review (17) Retirement (20) Review (7) Risk (6) Set Goals (24) Step by step (3) Tax (10)

Next steps:

1. Email me with any questions.

2. Use our goal-based investing template to prepare a financial plan for yourself
use this quick and fast online calculator to find out the SIP amount and asset allocation for your goals.

Don't forget to share this article on WhatsApp or Twitter or post this to Facebook.

Discuss this post with us via Facebook or get regular bite-sized updates on Twitter.

More posts...

Disclaimer: Content on this site is for educational purpose only and is not financial advice. Nothing on this site should be construed as an offer or recommendation to buy/sell any financial product or service. Please consult a registered investment advisor before making any investments.

This post titled Where to invest additional money every month? first appeared on 13 Dec 2021 at

We are currently at 161 posts and growing fast. Search this site:
Copyright © 2021-2022 All rights reserved.
Goal-based investing

Click here to create your own investing plan.