An investment that will mature to cash within a year time-period and considered as liquid is known as a short-term investment plan. Here are 6 short-term investment plans from a vast area of investment plans you must consider:
- Bank Fixed Deposits (FD):
Bank FDs are very secure investments and you can invest your money from 7 days – 5 years. Though you can withdraw the money before the maturity date it is not advisable to do so as by nature this instrument is not very liquid. Say, if you keep an FD for 2 years which yields 8% interest rate and decide to withdraw the funds after 6 months then you will get the interest of 5% which was valid for 6 months at the time you invested. Recurring Deposit is also a similar kind of investment option which will create a habit of regular savings.
- Savings Account:
If you are okay with less than substantial return but required high liquidity and no risk at all, then consider for a savings account opening. Just to keep in mind, different banks offer different interest rates.
- Money Market Accounts:
These are a special category of mutual funds and also known as liquid funds. These are invested in several money market instruments like term deposits, commercial papers, etc. The maturity period of the underlying assets in liquid funds is less than 91 days thus, enabling high liquidity. The liquid funds offer higher interest rates than a savings account and the tenure is always less than a typical mutual fund. In liquid funds normally, large institutions invest their money but being an individual investor who wants to earn above-average returns and take-over the inflation this can be considered as a good option. Tenure is from 1 day – 90 days or higher.
- Gold or Silver
If you want a hassle-free and uncomplicated way to earn return then investing in this is the right option. For both long and short-term investments, gold and silver are great.
- Short-Term Debt Fund:
The short-term debt funds are managed very conservatively with only one aim i.e., of securing capital and providing good return without the fear of market volatility. If you really want to make money out of the debt funds then you need to know exactly how they work for they are complicated. Debt funds are more tax efficient than bank FDs if you consider investing for more than a year. The tenure is anywhere from a month to 6 months or more as per your goal.
- Large Cap Mutual Funds
Investing in the equity or stocks of large companies for achieving good growth within a short period of time are large-cap mutual funds. Within 1 – 3 years if you want to earn a quick and smart return then go for these mutual funds. It starts with a minimum tenure of 3 years and is considered as high risk compare to the others as mentioned above.