My friend Shyam has excessive money and he is in search of a short-term investment option. He wants to get a quick return. Do you have excessive money? Do you want to invest this money for the short term? If yes you are at the correct place today we will be discussing about 10 best short-term investment options.
Short term Investment need
A short-term investment option is required when we have excessive money and there is a pressing expense expected shortly. Expenses could be anything but investment in good short-term investment would definitely increase the value of money.
Short-Term Investment Options
Fixed Deposit
Fixed deposit is the most popular investment option. FD is available with different tenures, starting from 7 days to 5 years. The interest rate varies of FD varies from 7% to 9.25%. Nationalized banks, Cooperative banks, and corporate FDs are a few lucrative investment options.
Saving Bank Account
Saving a bank account is a safe and very good short-term investment option. You must be thinking that savings banks will provide less interest 4% only but today you can earn up to 7% interest by placing your money in the savings bank. Few banks also offer higher interest on savings bank accounts.
Auto Sweep Account
Auto sweep provides the combined benefit of saving bank accounts and fixed deposits. An auto sweep account is a very good short-term investment option. Auto sweep account automatically converts the surplus amount of your account into a fixed deposit. In some cases, the penalty is applicable if FD under the auto sweep account is broken before 1 year.
FMP
A fixed maturity plan is a closed-ended debt scheme. FMP as the name suggests it has a fixed maturity date and fixed return. FMP is a low-risk risk high-return investment option. Investment in FMP also provides attractive tax benefits.
Liquid Funds
A liquid fund is a mutual fund that invests in money market instruments like term deposits, certificates of deposits, treasury bills, etc. You can liquidate money from a mutual fund in 24 hours.
Ultra Short-Term Funds
Ultra short-term funds invest in fixed-income instruments with short-term maturities. Ultra short-term funds provide good protection against interest rate risk. Some Good ultra-short-term investment funds are ICICI Prudential Ultra short-term plan and HDFC Ultra Short-term Bond Fund.
Certificate of Deposit
A certificate of Deposit is usually sold by the bank. The bank gives you the guarantee of returning the bank principal amount with interest. Premature withdrawal is not allowed in this option.
Equity Market Investment
Investment in the stock market is a risky affair, but it is a very good investment option for hungry investors. In the short term, you can gain good profit but sometimes you can end up making a loss also.
Mutual Funds
Mutual funds are also one of the risky investment options for the short term. If your investment horizon is for 1 year then you can invest in a good blue chip large cap oriented fund to get a good return.
Gold ETF
Yellow shining gold could be another option for short-term investment. As we know in recent past gold has given very good returns. Instead of investing in physical gold, you should invest in Gold ETF. Gold ETF investment provides good liquidity.
Before investing in any short-term investment option given above make sure you understand investment options in terms of associated risk and expected returns. Understand terms and conditions thoroughly before making investment.
