A short term investment is one where investment is made for the shorter duration in order to meet short term goals. Let us take an example if you are planning to purchase a new bike after one year and you want to make an investment for the same. It is called as short term investment. In above example purchasing a new bike is short term goal and duration is 1 year.
Short term goals include anything for which you need money in the near future. Few examples of short term goals are given below.
- A family vacation in India or abroad after 1 year.
- Money requirement for child’s education after 3 years.
- Purchase of new vehicle after 2 years.
- Renovation of house after few
- Buying a gift for your family member
- Any other short term goal
The duration of short term goal varies from person to person. However, generally goals up to 3 years’ of time duration are called as short term goals.
Also Read – 10 Best Stocks to buy for the long term
So, if you are ready to invest your money for your short term goal here is 10 short term investment options. These short term investment options are expected to give moderate returns along with liquidity for the withdrawal of funds. Go through all short term investment options given below and select best options based on your financial goal and investment strategy.
10 Short term investment options
Safe Short Term Investment Options
Saving Bank Account
Saving Bank account is safest short term investment options in India. Saving bank account can be opened at any bank any time. In general saving bank account offers 4% interest rate. However, few banks like Yes Bank, Kotak Bank offers higher interest rates up to 6%.
Auto Sweep Account
The second best short term investment option is to keep your money in saving bank auto sweep facility. Auto sweep facility enables you to earn additional interest on the excessive money. You can earn up to 9% interest rate by enabling auto sweep facility.
Short Term fixed deposit
Fixed deposit is most favorite short term investment option of many individuals. Fixed deposit scheme offers a fixed rate of interest from 6-9% based on time duration. The Fixed deposit can be opened with any nationalize or cooperative banks. Interest earned on fixed deposit is taxable.
If you are looking for safe and reliable investment option you can consider recurring deposit. In recurring deposit, you need to deposit money every month. Recurring deposit duration varies from 6 months to 10 years. You can open recurring deposit at a post office or at a bank. The interest amount earned on recurring deposit is taxable.
Fixed Maturity Plans
Fixed Maturity Plan is short term investment option. FMP is closed ended debt mutual funds. FMP is available from 15 days to 5 years duration. Some FMP has a lock-in period of 3 years. FMP is similar to fixed deposit and offers fixed type of returns.
Risky Short Term Investment Options
Company Fixed Deposit
The Company fixed deposit is next in the list of short term investment option. The Company fixed deposits are offered by big corporates in order to raise funds. The Company fixed deposit offers higher interest rate compare to fixed deposit. However, it is considered as risky investment options.
Debt funds are type of mutual funds that invests in fixed income schemes like bond etc. There are numbers of debt funds available in the market. Debt or income scheme provides regular steady income to the investors.
Equity Linked Saving Schemes
Equity Linked Saving Scheme is popularly known as ELSS. ELSS is one of the best short term investment options for tax saving and investment purpose. ELSS provides tax-free returns in the range of 12-14%. However, ELSS has a lock-in period for 3 years.
Balance Mutual Funds
If you are moderate risk taker you can plan to invest in balance mutual funds for a shorter duration. You can expect 10-12% return from good balance mutual funds.
The last short term investment option is gold. Gold can be a good hedge against inflation. However, Investment in gold is a risky affair and you may end up losing money in shorter duration. Invest in gold only if the duration of investment is two years or above. It is advisable to invest in gold via gold ETF.
The short term investment options mentioned above might not give you very high returns, however, it will defiantly give you moderate returns.
So, what are you waiting for select short term investment option as per your requirement and enjoy the fruits.
Do share your thoughts and ideas about short term investment options. It might help other investors.
If you are planning to invest for the longer duration you can go through our one of the most popular blog post – Top 10 long term Investment options in India.
10 best short term investment options in India