Short-term investments are quiet in vogue nowadays. Before peeking at the best short-term investment plans, it is necessary to correctly decipher the meaning of the term ‘short term investment’.
Any investment, which has a total time of one to five years, may be define as a short-term investment. Apart from the fact that short-term investments are popular nowadays, it is worth considering the fact that it has a wide range benefits over long-term investments. For example, in a short-term investment plan, the risks, relatively speaking, are less. Apart from this, the concerned bank or any other financial institution does not lock up the money.
In addition, it is interesting to note that as far as short term investments are concerned, the returns on investment is considerably substantial. Therefore, given the merits of short-term investments, it would be helpful to look at some of the best short-term investments available:
- Fixed Deposits: Needless to say, fixed deposits are by far one of the safest short-term investment plans in the market today. It offers a fixed rate of interest ranging from 4% to 11% per annum. Fixed deposits come with terms between ten days to even ten years.
However, it is important to note, that the invested money cannot be withdraw before the date of maturity. Interest is shell out three months after the commencement of the concerned amount of deposit. It is important to know that premature withdrawals of the invested money may attract some form of penalty, according to the norms of the bank. - Savings Account: Apart from the fixed deposits, a savings account is yet another reliable form of short-term investment. It also is arguably one of the best short-term investments. It is chiefly use for the sake of liquidity. The savings account can be open with any bank or any financial institution and the money can be keep safely until required. The banks pay around 4% to 7% interest rates. However, it counts on the amount and the duration of money kept in the particular bank.
- Gold Investment: As Far As gold investments are concerned, it is chiefly regard as one of the most sapient options of short-term investments. Gold, needless to say, can be great help in times of crises or financial burps, including pangs of inflation or any kind of socio-political unrest. A very weighty merit of investing in gold is that the swaying trends in the financial market do not affect the value of the yellow metal. Since the demand for gold is increasingly on the high, there has been a 23.5% return on investment.
- Five Years National Savings Certificate: As Far As the National Savings Certificate is concerned, it has a term period of five years. It is one of the more effective short-term investment plans. Considering the fact, the amount of maturity, it is interesting to note, is exempt from tax under the Section 80C of the Income Tax act of India. However, it is important to remember that the interest is certainly taxable.
- Liquid Funds: Liquid funds are said to have high liquidity values. Another very popular short term investment plan, it entails low risk and offers a fixed quantum of income. It is extremely flexible and secure, given that the investor can enter or opt out of the scheme at any time according to his or her preference. The maturity period of this fund is ninety days. This was done to primarily avoid interest risks that are highly volatile in nature.
- Bonds: One of the Best short term investments, bonds are completely free of risks along with being highly liquid. The principal amount is returned by the borrower at the date of maturity. It is basically advised for those who are looking to expand their investment portfolios.
- Fixed Maturity Plans: One of the best short term investments, fixed maturity plans are close-ended debt schemes. They offer high interest rates and are apparently free of any potential risk. These funds have a lock in period of three years. In essence, it can be remark, the fixed maturity plans are similar to the fixed deposit accounts discussed earlier.
- Recurring Deposits: A recurring deposit can be open with any bank or even the postal department. They have a tenure ranging from six months to even ten years. As far as the recurring deposits are concerned, investors can invest huge amounts of money. However, the interest rate is not exempt from tax.
- Treasury Bills: Treasury bills can be buy during the auctions. The minimum amount that can be invest is one lakh. The interest rates for treasury bills are liquid are low risk investments.
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