Top Short-term Investment Options Offering High-returns in India
Updated On Sep 25, 2023
Nowadays, there are a number of financial institutions offering investment plans. While buying investment plans, however, investors need to keep in mind certain factors in mind, liquidity, and tenure being one of those. So, if you are looking for short-term investment plans that offer great returns, then this is the right place. In the section below, we have curated a list of short-term investment options in India.
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What are Short-term Investment Options?
As the name suggests, short-term investment plans are those where you invest your money for a shorter period of time. These investment options have a shorter policy term and thus involve lesser market risks. These plans are ideal for those who have short-term investment goals and want to utilise them as soon as possible. However, it is important to note that these plans do not offer massive returns like any of the high-term investment plans.
Short-term Investment Options in India
Listed below are some of the best short-term investment options that you can consider buying in India:
- Recurring Deposit: Recurring Deposits or RDs are one of the safest investment options in India. It is ideal for those who are planning to invest not in a lump-sum manner but regularly. Recurring Deposits come with a minimum tenure of 6 months and go up to 10 years. So, depending on your requirements, you can choose an ideal policy term. You can get a Recurring Deposit opened in any bank. However, remember to check the interest rate and choose a financial institution that has a higher interest rate.
- Fixed Deposit: Bank fixed deposit or FDs as the name implies locks in your invested amount for a specified period of time. This type of investment option is less affected by market fluctuations and has a comparatively higher rate of return as compared to other options. Depending on your budget, you can get your fixed deposit account opened and also use a fixed deposit calculator to get an estimate of the return amount. The tenure of a fixed deposit can be as short as 7 days and can go up to 10 years.
- National Savings Certificate: The National Savings Certificate or NSC is another short-term investment plan that you can consider investing in. It has a tenure of 5 years and is thus best for those looking to get returns in a short period of time. You are also eligible for tax deductions under section 80 C of the Income Tax Act when you buy the National Savings Certificate.
- Liquid Funds: Liquid funds are basically a type of mutual fund that is good for a short-term investor. On investing in liquid funds, you can withdraw your money anytime and use it to fund your emergency needs. Liquid funds have interest rates of up to 7% and are a safe option as well.
- Post Office Deposits: Last but not least are post office deposits which can be considered for short-term investments. These can be opened in any nearby post office and are similar to a fixed deposit.
Things to Consider Before Investing in Short-term Investments
Here are some of the things that you should consider while investing in a short-term investment plan:
- Safety: One of the most important things that you need to consider when investing in a short-term investment plan is its safety. This is because if you have a low-risk appetite, you would never want to invest your money that has a high risk involved. Ideally, if you are investing in a short-term investment, you should always check the safety net the plan option offers.
- Liquidity: You also need to check whether the investment plan has a lock-in period or not. It makes no sense to invest in a plan that does not offer liquidity as this way it defeats the purpose of short-term investments.
- Tax Benefits: Another thing that you need to check before investing in a short-term investment is whether it is offering tax benefits or not. You should choose a plan that has tax advantages as this way you will be able to reduce your tax liability.
- Interest Rate: You should also check the interest rate and buy an investment plan that offers a higher interest rate.
Now that you know about the best short-term investment options, then stop thinking and start investing. You should however always compare these plans before investing in one.