As you all know the investment is a necessity for financial secured future. There is 2 kinds of investment
- Long Term Investment
- Short Term Investment
Today’s our post is centered on “Short Term Investment option”
A barrage of queries pass by our minds regarding where to invest, short term investment decision, What are the best short term investment?
So, without ado, let’s get started!
What are short Term Investment?
Short term investment options are designed to provide considerable returns in a fairly short span of time which can be a year or few months.
These plans are more focused onto to meet the expected near future expenses.
There are investors who aren’t interested in waiting for long years for their money to get double or multiplied. Such person looks for quick and effective results
With short term investment you can meet your financial objectives
Major Highlights of Short Term Investment option
- Short turnaround time
- Optimum return for low investment
- High liquidity
- Low risk
- Lesser investment amount
Best 10 Short Term Investment plan
1. Gold or silver
Gold and silver are traditional investment plan that is profitable since ages.
These investment instruments are sure to give huge returns
So, if you are looking for secured and risk free short term investment you can consider investing in golds and silver.
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2. Saving Accounts
Do you know, saving account is the best short term investment to invest in.
These accounts lets customer park their money in safer avenue while earning a monetary return.
It is to be noted that the interest rate are not very substantial but there is zero risk associated with it.
Before parking your deposit, make sure that you have a great knowledge about the interest rate of several banks.
3. Liquid Funds
These are kind of mutual funds that invest in short term government certificates and securities of deposits. You can enter and exit at any given time as these investments are secure. Try restricting throwing in your emergency funds in these, as the redemption takes around 2 days. One can expect around 4%-7% post tax return on liquid fund investment.
Investors can opt for the dividend option or the growth option. Dividend is taxed at nearly 30%. Capital gains are added to income and taxed at marginal income tax rate (rate of taxation). From a taxation point of view investors in the lower tax brackets are better off opting for the growth option while investors in the highest tax bracket can choose either option.
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4. Treasury Securities
When we talk about conservative investment treasure security strike our mind. These securities have stood for decades.
The guarantee that lies behind this security are regarded as one of the cornerstone. Their maturity dates vary from 91 days to 365 days.
Treasury securities or treasury bills are another good short-term investment plan offering high liquidity, safety, and satisfying returns.
5. Recurring Deposits
RD schemes usually have a minimum lock-in period of one month. Premature closure within one-month results in only the principal repayment, with no interest. RD accounts can be opened for as little as 6 months and in multiples of 3 months up to 10 years.
Interest earned is added to one’s income and taxed according to the income slab rate. TDS is deducted if the interest earned exceeds Rs. 10,000.
RD offers interest rates similar to Bank FDs. Currently, for tenures of 12 months and above, the interest rate ranges from 3.25% to 7.50% per annum, calculated from the date of the first deposit. Use an FD calculator to analyze returns.
6. Stock market and Derivatives
If you are someone who holds great knowledge about shares and stocks and have risk appetite then stocks and derivatives is indeed a great short term investment idea.
You can make the investment for long term as well as the short term as per the preference; it depends on the financial objective of the investors.
7. Fixed Maturity Small Investment Plans
FMPs are equivalent to FDs. The tenure can be from one month to three years.
They are close ended in nature. It usually invests in certificate of deposit, money making instrument, bonds, and corporate bonds and sometimes in a bank fixed deposit.
8. Post-Office Time Deposits
Post-office time deposits, also known as post office fixed deposits, are one of the safest and best short-term investment plans that offer assured returns to investors. The scheme is offered by India Post and is very popular in rural and remote areas of India.
In a post office scheme, the interest applicable on the deposited amount is on a yearly basis. Before the completion of 6 months, the post office scheme does not allow any premature withdrawal.
one can open a post office time deposit scheme for a tenure of 1 year, 2 years, 3 years or 5 years. Post office time deposit account offers the following post office FD return rate.
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9. Money Market account
Money market account is an interest bearing account that typically offers lucrative and higher returns than a saving account.
It proffers security of capital as well as worthy returns. There is no such lock in period; it has maturity tenure of 91 days.
It is well suited because it provides high liquidity, great returns and the risk factor is least.
10. Investment in NCDs, Corporate or Company deposit
Last, but certainly not the least, short term investment is NCD. The scheme allowed you to select a non-convertible debenture for securing your capital.
If offers lucrative interest rate varying from 9 to 12 %.
Now, you don’t require to wandering here and there for where to invest in short term. The above mentioned destinations are best to stop thinking and start investing
It’s important while making any investment be well-informed and take informative decision.
Do not get caught in temptation or lure of high profit and pool your funds in risk.
Risk comes from not knowing what you are doing the advice is here be knowledgeable about your investment decision and invest your funds in safe and secured destination to avoid any chaos.
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Frequently Asked Question on Short term Investment
Q. What are the best short term investment?
The best short term investment are listed below
- Saving account
- Recurring deposit
- Gold or silver
- Debt instrument
- Stock market/Derivatives
- Large cap mutual fund
- Treasury securities
- Money market securities
Q. what is classified as short term investment?
The short term investment are classified as an investment that gets mature within a time period of one year and considered as liquid
It is well suited for those individuals who want to gain higher profits in short period of time.
Q. Which Investment gives higher return?
Large cap mutual funds give higher return on investment
Q. How long is short term investment?
The tenure of short term investment can be one year or less than one year
Q. Which Policy is considered as best policy under LIC?
LIC Jeevan Saral is the best short term investment plan
Q. Which mutual Fund is best for short term investment?
Large cap mutual funds are the best for short term investment
Q. What are the key benefits of investing in short term investments?
Few of the benefits of short term investment are mentioned below
– Let’s read them out!
- Time span is not lengthy
- High liquidity
- High Flexibility
- Transparency
Q. Is short Term Investment an asset?
Yes, short term investments are considered as an asset.
Q. What is short term debt fund?
Short term debt fund are also known as income fund in mutual fund scheme which has a maturity period of less than 3 years
These funds majorly invest in corporate bonds, government securities, and is best suited for the individual who wants to fulfill their short term goals.
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Final Words
It is aptly stated that
“The secret to investing is to figure out the value of something –“When it comes to investing, we want our money to grow with the highest rates of return, and the lowest risk possible. While there are no shortcuts to getting rich, there are smart ways to go about it.”
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