Top Short-Term Investment In India For High Return On Investments

Short-term investments are optimised to give a better return within a relatively small timeframe. There is no pre-defined period for such investment options; however, anything between 7 days to a year is considered as a short term investment.

Such investments can prove very helpful to meet planned expenses in near future. It is ideal for people who want effective return after the policy matures but don’t want to lock-in their money for a considerable amount of time.

Short-term investments have grown in popularity among borrower thanks to their low risk, optimum returns, and quick turnaround times. Some of the best short term investment plans even allow first-time investors to participate in the scheme and earn a healthy return successfully.

Advantages of a Short-Term Investment Plan

There are various short-term investment schemes to make money in India that accommodates policyholders to earn maximum benefits in the shortest possible time span. Almost all of these schemes offer the advantages described below –

  • Best returns against minimum investments.
  • Smaller investment amount.
  • Lesser risk involved.
  • Higher liquidity ratio.

There are various options to choose from if you want to invest in a short-term venture. These are broadly divided into two categories, schemes that yields fixed income, and plans that yield market linked incomes. Let’s take a look at the best short term investment options that will give you a higher return against your invested capital.

best short term investment plans

  1. Fixed Deposits – Fixed deposits are one of the most popular short-term investment plans among investors. It offers flexibility to an investor due to its wider tenor choices ranging from 7 days to a few years (different financial institutions offer different tenors to choose from).

FDs offer provision to reinvest the fund where you renew the scheme after it matures. Also, under the rules of Deposit Insurance and Credit Guarantee Corporation, each investor stays insured for up to Rs. 1 Lakh on both principal and interest.

  • Interest rates – The rate of interest is aligned with the RBIs repo rate and ranges from 4.00% to 7.25% depending on the financial institution. Senior citizens earn an additional 0.5% interest on their capital.
  • Tax Benefits – The interest rates are added to one’s income and fall under taxation according to their income slab.
  1. Recurring Deposits – A recurring deposit is among the best short term investmentsif you don’t want to invest a lump sum amount in an investment scheme. It allows you to deposit a certain amount of fund periodically in your RD account. You will receive that fund along with the accumulated interest when the policy matures.

RDs have a minimum tenor period, usually of 6 months. After that, the tenor increases in 3 months increments for up to 10 years. However, certain financial organisation might have different tenor options.

RD accounts come with a lock-in period (typically about of a month). A premature closer during that period will not collect any interest from your lender.

  • Interest rates – Recurring deposits share the same interest rates applicable on fixed deposits. The interest rate is calculated from the date an investor deposits the money for the first time.
  • Tax benefits – Interest earned is considered as one’s income, and applicable tax will get deducted.
  1. Large-cap Mutual Funds – Large cap mutual funds are policies which invest in stocks of large businesses to achieve maximum return in the shortest period. These generally have an investment tenor between 1 to 3 years.
  • Interest rates – Large cap mutual funds offer a significantly higher interest rate ranging from 0.58% (1-year returns) to 12.31% (3-year returns).
  1. Money Market Accounts – Money market accounts invest in term deposits, commercial papers, etc. These particular types of investments offer higher interest rates than fixed deposits.

It is one of the short term investment options with high returns if you want above average returns without fluctuating market prices.

Choose your tenor period carefully when you put funds in a short-term investment plan to maximise the returns. Avoid premature closer as it can result in a loss of interest.

You can opt for a personal loan to tackle a financial emergency instead of closing your best short term investments. You can also know for long term investments like where to invest money for 3 years, 5 years or more. Companies provide attractive interest rates and pre-approved offers for loans. These offers help save you time by simplifying the process of financing.

Short-term investments are ideal to reach approaching financial goals. Investors who do not want to wait for years for their money to increase can opt for these types of investments schemes to earn the most effective results

Post Author: Jennifer Slegg

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