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Best Short-Term Investment Plans

Planning your investments wisely starts with understanding your liquidity requirements, risk appetite and investment tenure. For short-term goals, fixed deposits are a popular choice for their stability. Dive into this blog to discover more best short-term investment plans tailored to your financial goals.

If you are planning to begin short-term investing soon, consider reading this blog to the end.

5 Best Short-term Investment Plans with High Returns 

In short-term investing, the primary goal should be to preserve the capital and simultaneously secure sustained growth. Keeping this in mind, we suggest the following appropriate options:

Recurring Deposits

Recurring deposits are offered by several banks and post office branches across India. You can open them for just 6 months or in 3-month increments up to 10 years. When it comes to liquidity, RDs are the most convenient option as they have a lock-in period of just 1 month. 

If you wish to close your recurring deposit account within 1 month, then the concerned financial institution only repays you the principal, with no additional interest. Moreover, it is important to note that earnings from recurring deposits are taxed normally as per your income slab rate. 

Liquid Funds

These are specialised mutual funds where the investors’ money is allocated to short-term government certificates and securities. As a result, you do not have to worry about lock-in periods while investing in liquid funds. 

However, financial advisors do not suggest keeping liquid funds as an alternative to savings accounts. This is because, although there is no lock-in period, it may still take 2-3 days to gain complete access to your investments after they have been approved by the fund house.

You can expect an interest rate of up to approximately 7% from these funds. Additionally, as the funds are directly invested in the secondary market, you may realise higher returns on your investment under certain circumstances.

Treasury Securities

Treasury securities or T-bills are considered increasingly secure among short-term investment options. The RBI issues these securities on behalf of the Indian Government. T-bills usually have a maturity period of 91 to 365 days. Those looking for high liquidity, safe and satisfying profits, can consider investing in treasury securities. 

Post Office Time Deposits

Very similar to bank FDs, post office branches offer time deposits to their customers, through which they can earn fixed interest across varying tenures. Time deposits are widely considered one of the best short-term investment plans. One can easily open this type of account by physically visiting any post office branch in India.

They come with maturity options of 1 year, 2 years, 3 years and 5 years. In these schemes, the promised interest sum gets accrued to your account annually. Moreover, you are not allowed to make any premature withdrawals before 6 months of completing your investment.

Large-Cap Mutual Funds

Large-cap funds prioritise stocks of large businesses to secure stable growth in a short timeframe. Investment tenures in these funds typically range from 1 to 3 years. Even beginner investors can rely on this investment avenue as it involves low risk due to its focus on top-listed companies in the country. In return, you can expect 8% to 13% returns over your investment tenure.

As far as tax implications are concerned, if you retain your holdings for less than 12 months, you incur a 20% tax liability as per the Short-Term Capital Gains (STCG) taxation rule. Otherwise, you have to pay a 12.5% tax on your profits under Long-Term Capital Gains (LTCG).

Final WordAfter you have identified the best short-term investment plans, you need to carefully allocate your monthly investable amount. If you are planning to begin investing soon to fulfil a short-term goal, a mix of two or three of the above-mentioned options can be a good starting point.

About The Author

Subhodip Das

With an experience of 13 years in the field of Digital Marketing, Subhodip Das specialises in Content. Writing and Marketing Strategies. He has worked with well-established organisations and startups helping them achieve increased search engine visibility. An avid researcher on market investment, Subhodip is also a passionate cook and foodie.

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