You would have heard the famous saying that you should not say what is left after spending but spend what is left after you save. It sums up the importance of saving for your better future money plays a crucial role in our life. Every day we wake up and do our jobs to get some money. But we are also investing that hard-earned money in the perfect place so that it fetches a great return and helps us achieve our objectives.
Investment options are classified as short-term and long-term. Short-term investments could be used to buy a new jewelry piece, bike, or car. There are some lucrative one-year investment plans available out there that can help you make some quick returns.
Although there are multiple investment options for short term investments, it is important to know the core ones which are effective and give good returns.
Under this guide, you can see the top 10 best investment options for the short term, which are mentioned here.
1) Recurring deposits
It is one of the most prominent short-term investment options used by most people to park their money for short-term needs. The best part is that they are offered in all the banks. It helps you earn fixed interest on the amount that is invested till the majority. You can easily open the recurring deposit account by logging in to the net banking account, and you have to choose the amount to save every month and specify the tenure. The rate of return is around 4% to 6% per annum, and the duration is between six months to 10 years.
2) Fixed Deposits
Fixed deposits are also one of the best ways to create a corpus for short-term investments. Banks offer it, and the amount is invested for a specific timeline that starts from seven days and goes up to 10 years. After the given deadline, it automatically matures, giving you a good amount of withdrawal. Even though the interest rates are higher than the savings accounts and recurring deposits, the only catch here is that you cannot withdraw it early.
3) Corporate Deposits
Like your fixed deposits in the bank, corporate deposits are offered by the corporates, and the companies collect them for expansion. The interest rate is slightly higher than the fixed deposits offered by the bank as the risk of default is also high. If you have an excellent risk-taking appetite, you can invest in the corporate FDs and earn a better amount than the bank FD.
4) Debt Mutual Fund
Mutual funds mainly invest in debt instruments like government bonds and commercial papers, similar to other money market products. It is one of the best short-term investment options for people looking forward to taking risks and is also suitable for short-term returns. The rate of return is anywhere between 8% to 11% per annum. The duration of the investment is around six months to three years.
5) Systematic investment plan in equity mutual funds
Systematic investment plans work the best in the long term perspective, but you can also make the most of them by investing them for the short term. If you’re looking for an investment of around one year, it is suggested to start to slip into a large-cap mutual fund. It is because they invest in big companies which can give you quick returns. The duration is anywhere from six months to five years.
6) Stock market
One of the best short-term investments is stock markets to invest in and earn maximum returns, provided you have a substantial risk-taking appetite. If you spot the right stocks, invest in them for a few months to make the most of your investment. The duration of investment can be anywhere from one month to five years. The returns start from 10% and go up to 100%.
7) Savings account
A savings account is one of the most prominent short-term investment plans, and it is a deposit account at the bank or any financial institution where you can keep your extra cash. It provides optimum liquidity as the users can withdraw the invested amount whenever they want. The best part is that there is no limit on the deposit amount.
8) Treasury securities
The treasury securities are backed by the government, offering high liquidity and safe capital with good returns. It’s a great place to keep the assets safe; the duration is anywhere from 91 days to one year. You can expect a 7.8 percent return on investment.
9) Money market account
It is also prominently known as liquid funds, as money market accounts are specially designed to give you the security of capital and decent returns. They are considered one of the best short-term investment options. The maturity limit is around 91 days, and there is no lock-in time. Therefore, they offer high liquidity and the least risk among all the funds.
10) Treasury securities
Treasury securities, also known as treasury bills, offer great short-term investment plans by offering optimum liquidity, and you can expect satisfying returns. The maturity dates are anywhere from 91 days to 365 days.
Conclusion:
Short-term investments are the best options to accomplish short-term financial objectives. You can ensure financial freedom with short-term investments that will help you manage unexpected expenses. Any investment can be termed as a short-term investment if it fulfills some basic requirements like it provides liquidity and the investment is made for a short term for just 12 months. the bond that matures within a specific time frame can also be known as a short-term investment plan. Marketable equity security is considered one of the best short-term investment plans and can be easily traded with a liquid fund.