You should diversify the investment across multiple asset classes. Now, where you should invest the money depends on a lot of factors including your age and risk appetite. I am assuming that you belong to the youth category. Usually, young earners are advised to invest the majority of their money into equity. Equity by nature takes some time (10 years on average) to give a good return. Over the short term, it is highly volatile and can even give negative returns. Hence this is an ideal investment product for young people. Young people can have an 80–20 allocation for equity-debt in their portfolio.
Hence from the 20,000 rupees, you can invest 16,000 rupees into equity and the remaining 4,000 rupees into debt. In equity you can choose to invest in the below products:
- Equity mutual funds
- Stocks
- P2P lending (this is not exactly a type of equity but a very good investment option).
And for debt, you can invest in any one of the following:
- Debt mutual funds
- Fixed deposits
- Recurring deposits
- PPF.
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