Short-Term Investments Plans With High Returns in India

By Okbima 05 Jan 2024
Short-Term-Investments-Plans

 

Short-term investment plans with high returns in India offer individuals the opportunity to grow their money quickly without committing to long-term investments. These plans typically have a maturity period of one to three years and are an excellent choice for investors looking to achieve short-term financial goals. 

 

What are Short-Term Investments Plans?

Short-term investment plans have a relatively short maturity period, typically ranging from a few days to a few years. The main objective of short-term investment plans is to preserve the principal amount and generate higher returns compared to regular savings accounts. These plans are considered relatively low-risk compared to long-term investments since they offer liquidity and flexibility in accessing funds quickly without significant penalties or loss of value. 

 

Top 10 Best Short-Term Investment Plans With High Returns

 

Investment

Rate of Return

Holding Period

Savings Account

2% to 7% p.a.

Nil

Treasury Securities

7.5% p.a.

91 days to 364 days

Fixed Deposit

2.5% to 8% p.a.

7 days to 10 years

Recurring Deposits

4% to 8% p.a.

6 months to 10 years

Liquid Mutual Funds

2% to 6% p.a.

1 day to No limit

Debt Mutual Funds

6% - 9% p.a.

36 months to No limit

Corporate Deposits (CD)

6% - 12% p.a.

1 to 3 years

National Savings Certificate (NSC)

6.8% p.a.

5 years

Equity Mutual Funds

7% - 15% p.a.

12 months to No limit

Stocks, Commodities & Derivatives Market

Variable

Less than a day to no limit

 

1. Savings Account

A savings account is a type of bank account where individuals can deposit and store their money. It is designed to help individuals save money over time by earning interest on their deposits. Savings accounts provide a safe and secure place to keep funds while allowing individuals to easily access and manage their finances.

2. Treasury Securities

Treasury securities refer to the bonds and bills issued by the Government of India to fund its expenditures and manage its borrowing requirements. These securities are considered safe investments as they are backed by the Indian government. They offer fixed interest payments and are available in various maturities, providing investors with different investment options.

3. Fixed Deposit

Fixed deposit is a popular investment plan in India where individuals can deposit a lump sum amount for a specific tenure at a fixed interest rate. It is considered a safe investment as it offers guaranteed returns, making it ideal for risk-averse investors. Fixed deposits provide stability and security for those looking to grow their savings over a fixed period.

4. Recurring Deposits

Recurring Deposits are a popular savings option where individuals can deposit a fixed amount every month for a specific period. These deposits offer higher interest rates compared to regular savings accounts and are a safe and reliable investment option. They help to make a habit of regular saving and provide a disciplined approach towards financial planning.

5. Liquid Mutual Funds

Liquid mutual funds are investment options that offer high liquidity and low-risk profiles. They primarily invest in short-term fixed-income options like treasury bills, certificates of deposit, commercial paper, and government securities. These funds are ideal for investors looking for steady returns and quick access to their funds, making them a popular choice for parking surplus cash or for short-term financial goals.

6. Debt Mutual Funds

Debt mutual funds are investment options that primarily invest in fixed-income securities such as government bonds, corporate bonds, money market instruments, and debentures. These funds aim to generate stable returns while maintaining low risk, making them suitable for conservative investors seeking capital preservation and regular income. The performance of debt mutual funds is influenced by interest rate movements and credit risk associated with the underlying securities.

7. Corporate Deposits (CD)

Corporate deposits (CD) refer to the funds invested by corporations and other non-banking entities in fixed deposits offered by non-banking finance companies (NBFCs) and corporate entities. These deposits provide corporations with a reliable and secure investment option, typically offering higher interest rates than traditional banking options. However, it is important for investors to carefully assess the creditworthiness of the issuer before investing in CD.

8. National Savings Certificate (NSC)

The National Savings Certificate (NSC) is a government-backed savings scheme that encourages individuals to invest their money for a fixed time. It offers a relatively high rate of interest, which is compounded annually. The NSC is a popular investment option among risk-averse individuals as it provides guaranteed returns and tax benefits.

9. Equity Mutual Funds

Equity Mutual Funds offer investors the opportunity to invest in a diversified portfolio of stocks. These funds aim to generate long-term capital appreciation by investing in companies across various sectors. With professional fund managers, investors can benefit from their expertise in stock selection and portfolio management, making equity mutual funds a popular investment option in India.

10. Stocks, Commodities & Derivatives Market

The stocks, commodities, and derivatives market in India play a crucial role in the country's economy. With a diverse range of investment options, this market offers opportunities for individuals and businesses to invest and trade various financial instruments. It helps in capital formation, price discovery, and risk management while contributing to the overall growth and development of the Indian financial system.

 

Benefits of Short-Term Investment Plans

Short-term investment plans offer several benefits, making them attractive to investors with specific financial goals and preferences. 

• Liquidity: Short-term investment plans are designed to be easily converted into cash. This provides investors with quick access to their funds, making them suitable for meeting immediate financial needs.

• Capital Preservation: Short-term investment plans are generally considered lower risk than long-term options. This makes them suitable for individuals and businesses seeking to preserve their capital while earning a modest return. 

• Flexibility: Short-term investment plans offer flexibility in terms of investment duration. Investors can choose plans with maturities ranging from a few days to a few years, allowing them to align their investment strategy with their specific financial goals.

• Stable Returns: While the returns on short-term investments may be modest compared to riskier options, they often provide a stable and predictable source of income. 

• Diversification: Including short-term investments in a diversified portfolio can enhance overall risk management. 

 

Things to Consider Before Investing in Short-Term Investment Plans With High Returns in India

Investing in short-term investment plans with high returns in India can be attractive for individuals looking to grow their wealth quickly. However, it is important to consider certain factors before making any investment decisions. 

• Risk tolerance: Short-term investment plans with high returns often come with higher levels of risk. It is crucial to identify your risk tolerance and only invest an amount you can afford to lose. 

• Investment horizon: Short-term investments typically have shorter maturity periods, ranging from a few months to a few years. Consider your investment horizon and whether the time frame aligns with your financial goals.

• Returns vs. liquidity: While short-term investment plans may offer high returns, it is essential to evaluate the liquidity of the investment. Some investments may have lock-in periods or penalties for early withdrawals. 

• Investment options: Research and understand the available short-term investment plans in India. Some popular options include fixed deposits, liquid funds, short-term debt funds, and government savings schemes. 

• Past performance and credibility: Before investing, analyze the investment option's past performance. Look for consistent and positive returns over time. 

• Tax implications: Understand the tax implications of investing in short-term investment plans. Certain investments may be subject to income tax or capital gains tax. 

 

Conclusion 

In conclusion, short-term investment plans offer quick liquidity and flexibility but come with higher risks. Investors should prioritize capital preservation, diversification, and thorough research to navigate the volatile nature of short-term markets. Overall, a balanced and informed approach, with a realistic assessment of risk, can optimize the potential for short-term gains while lowering potential losses.

 

Read More: 

  1. Post Office Monthly Income Scheme

  2. Best SIP plans for 5 years - Top SIP Mutual Funds To Invest

  3. ULIP vs Mutual Fund: Which Is Better In 2024?

 

FAQs on Short-Term Investments

What are the best short-term investments?

The best short-term investment options are Savings Accounts, Recurring Deposits, Gold or Silver, Debt instruments, Stock Market/Derivatives, Large-cap mutual funds, Treasury securities, Money market funds, Post-Office Term Deposits, and Arbitrage Mutual Funds.

 

Which are the top short-term investment funds to invest in 2024?

Here are the best short-term investment schemes to invest in 2024 – Short-term corporate bond funds, Short-term government bond funds, Money market accounts, Certificates of deposit, Cash management accounts, and Liquid funds.

 

Which investment gives the highest return?

A large-cap mutual fund gives higher returns on investment.

 

How long is a short-term investment?

The tenure of a small investment plan can be 1 year or less.

 

Are Prepaid expenses a short-term investment?

Yes, prepaid expense is a short-term investment because the prepaid amount is either exhausted or expires within 12 months of the balance sheet date.

 

Which policy is best in LIC for the short term?

The LIC Jeevan Saral is the best short-term investment plan.

 

Which mutual fund is best for the short term?

A large-cap mutual fund is the best short-term investment option which gives higher returns on investment.

 

What are cash and short-term investments?

Short-term investment (STI) and cash (Cash) are two separate balance sheet line items. They are both liquid assets.

 

What is a short-term debt fund?

Short-term debt funds, also known as income funds in mutual fund schemes, have a maturity of less than three years. They mainly invest in debt instruments such as corporate bonds, government bonds, etc.

 

What are the benefits of investing in short-term investment?

Some of the benefits of short-term investment are Short duration of time, High flexibility, High liquidity, and Transparency.

 

Is a short-term investment an asset?

Yes, short-term investment is an asset.

 

Which are the best short-term investment plans for 3 months?

The best short-term investment plans for 3 months are Certificates of Deposit (CDs), Treasury Bills, or short-term bonds. 

 

Which are the best short-term investment plans for 1 month?

The best short-term investment plans for 1 month are liquid funds, money market funds, or ultra-short-term bond funds. 

 

Which are the best short-term investment plans for 6 months?

The best short-term investment plans for 6 months are Fixed Deposits, short-term corporate bonds, or debt mutual funds. 

 

Which are the best short-term investment plans in SBI?

The best short-term investment plans in SBI are  SBI Fixed Deposits, Savings Plus Account, or SBI Short-Term Debt Fund for reliable short-term investment options.

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