What are the best short-term investment options in India?

Money is certainly not everything but plays a vital role in each of our lives. The moment you step out of your home, you need money to commute, buy anything that you need, and even to get any kind of service. As a matter of fact, we work hard in our respective jobs or business to make as much money as we can. Well, earning money is not enough if you do not know how to grow that amount. And to do so, you can look for some short-term investment options. So, let us take a look at the various short-term investment plans and options that are available in the market.

Fixed Deposits (FD)

This is one of the safest short-term plans that is opted for by many in the country. The FDs are basically offered by banks and you can invest the amount for a period between 7-10 years. The rate of return remains fixed. After the plan is matured, you can withdraw the money, and cannot withdraw anything before maturity without incurring a penalty. The interest rates in FD are higher.

Rate of return: 2.5% to 5.5% per annum

Duration: 7 days to 10 years

Recurring Deposits (RD)

This is one of the most common short-term investment options that is used by several people. This is also one of the safest options as it is offered directly by banks. Till the time of maturity, the rate of interest is going to be the same. To open an RD account, you just have to log in to your net banking account. You have to choose the amount of money that you intend to save every month and also choose the tenure.

Rate of return: 4% to 6% per annum

Duration: 6 months to 10 years

Corporate Deposits (CD)

It is the same as Fixed Deposits; however, the only difference is that the deposits are collected by the corporates to expand and operate. The interest rates for Corporate Deposits are comparatively higher than the bank FDs since the risk of default is also quite higher. It is suitable for those, who are comfortable with taking a risk.

Rate of return: 6% to 8% per annum

Duration: 1 to 3 years

Debt Mutual Funds

The money you put in mutual funds is basically invested in debt instruments like commercial papers, government bonds, treasury bills, corporate bonds, etc. This kind of short-term investment option is ideal for people who are not fond of taking risks.

Rate of return: 8% to 11% per annum

Duration: 6 months to 3 years

SIP in Equity Mutual Funds

Systematic Investment Plans (SIP) usually come under long-term investment plans but you can also use them for short durations. You will definitely get a good return. You can invest the money for 1 year and see the kind of return you get.

Rate of return: 8% to 15% per annum

Duration: 6 months to 5 years

Stock Market

If you are a high-risk taker, you can invest your money into the stock market and earn a maximum return. However, while doing so, you need to make sure of spotting the right stocks and keep investing in them for some months to maximize your returns. There are chances that you may even lose part of the capital if you invest your hard-earned money in the wrong stocks.

Rate of return: 10% to 100% per annum

Duration: 1 month to 5 years

Savings Account

A savings account is one of the most popular short-term investment options in the country that is chosen by many people. You can open a savings account with a bank or a financial institution where you will be able to keep the extra cash and earn good interest. This option provides maximum liquidity as you can withdraw the money you invest into it, at your convenience. Also, there is no cap on depositing the amount, and most of the banks offer zero balance accounts.

Rate of return: 3.5% to 7% depending on different banks

Duration: Unlimited

If you want to secure your family’s finances in the future, you can also look for term insurance. To understand term insurance properly, you can visit the website of IIFL. You can check out all the term insurance plans and opt for the one that is suitable for you.

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