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Top Short-Term Investment Plans

Short-term investments are those with a duration of between one and five years. Comparing short-term investment plans to their long-term equivalents, there are a number of benefits. The risks associated with this option are lower, and the sum of money is not locked up by a banking or financial organization in an investment scheme for a limited period. Additionally, the return on investment (ROI) is pretty significant.

Here’s a brief overview of some of the top short-term investment options:

Fixed Deposits

A fixed deposit is one of the financial markets’ most secure short-term investment options. The plan features a fixed interest rate that ranges from 4 to 11% annually. Fixed deposits have maturities ranging from 10 days to 10 years, although the sum of money cannot be taken out or withdrawn until maturity time. According to Section 80C of the Income Tax Act of 1961, interest is paid three months after the investment starts and is not subject to tax. Withdrawals made too soon may be subject to a penalty that the bank will specify.

Savings Account

A savings account, which is primarily used for liquidity, is another reliable and secure method of short-term investing. Money can be deposited with any financial institution or bank and maintained there until needed. Based on the amount of funds and the length of time that money is maintained in the account, banks provide interest rates ranging from 4 to 7%.

Investment in gold

Whenever it is related to investment for a short period of time, gold is regarded as one of the best choices. In times of uncertainty, the gold metal is valuable and also provides safety and stability amid banking crises, price inflation, or societal unrest. The fact that the value of gold is unaffected by financial market fluctuations is another advantage of investing in precious metals. There has been a 23.5% return on investment over the past couple of years due to the valuable metal’s rising demand.

5 years of NSCs, or national savings certificates

The Indian Postal Department’s National Savings Certificate has a five-year term. The amount of maturity is free from tax under Section 80C since it is an efficient investment strategy. Yet the interest earned is subject to taxation.

Liquid Funds

High-liquidity assets can be invested in government-offered short-term securities or certificates of deposit. Because it is safe, a person can join or leave the programme whenever it suits him. As a short-term investing strategy, this fund provides a set current income with low-risk and low-return investments. The term of this investment is 90 days, with the aim of reducing the risk of changing interest rates. To invest in a liquid fund, the investor can pick between commercial bank-issued certificates of deposit, corporate debentures, or governmental treasury bills.

Bonds

A bond is created when an investor lends money to an organization, such as the government or a corporation. Bonds have great liquidity and are risk-free. At the time of maturity, the borrower returns the principle amount plus a fixed annual interest rate. Bonds are a short-term investment option for anyone wishing to add variety to their investment portfolio.

Plans for Fixed Maturity

These are closed-ended debt programmes, meaning that the plan’s duration corresponds to the programme’s. FMPs are without risk and give a post-tax return that is both appealing and high. The funds have a three-year lock-in term. The fixed maturity plan resembles a fixed deposit account from a bank.

Recurring Deposits

A recurring deposit account can be opened with any bank or postal service, making it another trustworthy and efficient investment strategy. Banks provide recurring deposits with terms ranging from six months up to 10 years. A recurring deposit account from a bank or post office is an option for investors who don’t have much money to invest but wish to make regular monthly savings. The amount of interest earned in an RD is not tax-exempt.

Certificate of Deposit

Certificates of deposit, which are offered by banks, have a set maturity date. It is a low-risk, low-return investment since both the interest rate and the principal investment are fixed. Although early withdrawal of money is not permitted, the investor is informed of the amount at the completion of the maturity term.

Funds with Short-Term Floating Rates

The short-term variable rate fund, an open-ended investing strategy, provides a steady income for a specific time. The principal amount is split between floating-rate instruments and fixed-rate instruments when the rate of interest is floating. This investing strategy is suitable for investors with short-term objectives who are risk-phobic.

Treasury Bills

Treasury bills, which are issued by the Reserve Bank of India (RBI), can be bought in auctions that are held either biweekly or monthly. The minimum investment amount is Rs. 1 lakh, and the maturity time can be anywhere between 91 and 364 days. Treasury bills, among the most highly liquid and low-risk assets, have a rate of interest that depends on the overall performance of the market.

These investing strategies were suggested for short-term holdings. Short-term saving is necessary in order to achieve long-term objectives. However, in order to achieve the best results, you must speak with a financial consultant before selecting any of the aforementioned short-term investing alternatives.

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