Top 10 High Return Short-Term Investments in India 2023OkBima 17 Aug 2023
Transient transactions or tangible assets that can be quickly turned into cash, often within five years, might be referred to as short term investments. Investing in short-term securities, highly liquid assets, is a great way to store surplus cash in a secure location temporarily. Short-term assets have a three- through twelve-month holding period before they can be changed to cash. These items are of great quality and have lots of liquid assets.
What is Short Term Investments?
Short term investments refer to financial assets that are acquired with the intention of holding them for a short duration, typically one year or less. These investments are often made to preserve capital or generate a quick return on investment. Common examples of short term investments include Treasury bills, certificates of deposit (CDs), money market funds, commercial paper, and short term bonds.
The primary objective of short-term investments is to provide liquidity and flexibility to investors. They offer a relatively low level of risk compared to long-term investments, as they are less exposed to market fluctuations and economic uncertainties. However, the potential returns on short-term investments are generally lower than those of long-term investments.
The 10 Best Options for Short Term Investments Plans
The best short term investment options depend on your financial goals, risk tolerance, and the current economic environment. Here are ten options you might consider for short-term investments 2023:
1. Liquid Funds or Money Market Accounts
Liquid funds and money market accounts are both financial instruments designed to provide investors with a relatively safe and convenient way to park their funds while earning a modest return. However, they have some differences in terms of characteristics, risk, and accessibility. These have the shortest risk and highest liquidity among mutual funds, with a 91-day maximum maturity period and no lock-in period.
1. Money market accounts can be established for terms shorter than thirteen months.
2. High liquidity is mainly provided, and quick recovery is possible with this short term financial choice.
3. Money market fund earnings are both not fixed nor guaranteed. A 7% yearly interest rate is what MMF now provides. For best results, investors should first decide on their investment prospect and then decide which other investment instruments of these funds have maturities that correspond to their investment prospect.
4. In this short duration financial plan, the earnings on the invested money are appended to the investor's income and taxed accordingly. The post-indexation tax rate for the profit made on these assets for over thirty-six months is close to 20%.
2. Fixed-Term Bank Deposits
Fixed deposits, which involve placing a lump sum of money in the bank for a predetermined amount of time, are additionally referred to as investments for a short time or savings instruments for a brief period. The fixed deposit program, which offers a stable FD interest rate on investments and guarantees returns, is one of the best short term options.
1. The period of a fixed deposit account can be any combination of seven days, fourteen days, thirty days, forty-five days, or even as long as ten years, making it among the most secure investments for short term plans. At maturity, one can reinvest the money or renew the deposits.
2. In addition to providing high investment liquidity, the fixed deposit system also controls the risk of reinvested funds.
3. Fixed deposit accounts guarantee returns after the fund's term and give an annualized interest rate on investments. For investments lasting more than a year, fixed deposit interest rates range from 8% to 9%. The annualized interest rate on fixed-income schemes remains constant even during market volatility.
4. The high-income tax rate on FDs might reach 30%, based on which category of earnings the individual comes under. The accumulated interest is subject to taxation. Investors cannot deduct taxes from their fixed deposit balances.
3. Deposits That Recur
RD accounts may be opened for as long as ten years with a minimum tenure of 6 months and multiple terms of 3 months.
1. Typically, recurring deposit plans have a minimum lock-in term of one month. Only the amount originally deposited and no interest is paid to the investors in the event of an early account closure within a month.
2. One of the greatest short-term investment plans, the interest rate for recurring deposit accounts is the same as for bank fixed-rate mortgages. The interest rate in effect at the moment is 6.5% per year for 12 months or longer. The interest will begin accruing on the first deposition date. Before considering an investment choice, it is advised to use the FD calculator online tool to analyze the FD returns.
3. The interest received on an investment is added to the investor's income and taxed at the applicable income slab rate. If the interest earned in this short-term investment plan exceeds Rs. 10,000, TDS is taken off.
4. Debt Funds
Debt investments are an additional short term investment strategy for those who are cautious about risk. Debt investment vehicles are excellent as they stabilize capital and return positive results without bothering about market instability. It is an excellent alternative for short term savings because it can provide returns of as much as 10.5%.
1. Short term debt fund plans are categorized into three groups according to tenure.
2. Investments could be made into debt and liquid securities with a maximum maturity of ninety-one days in the liquid fund option.
3. Investing in the debt and liquid funds for a three to six-month period is what the term "ultra-short-duration asset or fund" means.
4. Low-duration fund – In this fund option, the capital is held in the money market and debt assets for 6–12 months.
5. High liquidity is mainly presented in investments by debt funds with liquidity. The maximum maturity of the debt fund with liquidity, which gives higher returns than the savings account with an aggregate maturity of ninety-one days, is available.
6. Debt funds could be regarded as among the most beneficial short-term investing strategies since they prepare with regular returns with low risk. The current interest rate on investments offered by debt funds ranges from 7% to 9%.
7. Capital gains tax is levied on loan funds in terms of taxation. When a fund is kept for three years, the short-term capital gain tax (STCG) is charged to the gains made on the investment. The capital gains accrued on a fund that was kept for more than three to four years are subject to long-term capital gain tax.
5. Time Deposits at the Post Office
One of the greatest and most protected short term investment options with assured returns for investors is post office time deposits, frequently denoted as post office service fixed deposits. The India Post-offered program is particularly admired and well-received in India's rural and outlying regions.
1. A post office service time deposit profile may be set up for 1, 2, 3, or 5 years.
2. The interest on the accumulated sum under the post office plan is determined annually. The post office code forbids any premature withdrawal before six months have passed.
3. The post office time deposit program offers the post office service fd rate of return listed below.
4. An interest rate that applies to the account that ranges from 5.5 to 6.7% can be set for a tenure of 1 to 5 years.
5. The interest on the sum of money accumulated is then appended to the depositor's revenue and assessed at the applicable income rate of tax for the tax slab in which the depositor is located.
6. Large-Cap Mutual Funds
Huge-cap mutual fund investments are short-duration strategies where the decision to invest is made explicitly in stocks of huge companies to achieve substantial expansion in less time. These fantastic small-scale investment plans can provide prompt and prudent returns within one to three years of the investment period.
7. Precious Metals Like Silver And Gold
Similar to the ever-expanding trees of an investment forest, silver and gold are advantageous for long-duration and short term investments. Given the daily increases in the value of precious metals like silver and gold, these investment strategies are ensured to return colossal returns. Therefore, you must participate in silver and gold to find risk-free and secure brief-period investment strategies and pass that. It's important to remember that these metals' luster won't disappear any time soon.
8. Tax-Exempt Bonds
A further exceptional short term strategy that offers great liquidity, security, and pleasing returns is the purchase of Treasury bills or Treasury securities. 91 to 365 days can pass before they reach maturity.
9. Derivatives and The Stock Market
For those with a high-risk tolerance and strong market understanding, securities, assets, and derivatives are advantageous. Resting on the investor's monetary goals, they may make this investment for a brief or extended time.
10. Corporate Deposits and NCD Investments
Our list of tiny investment plans concludes with NCDs or corporate deposits, which are surely not the least popular option. You may choose a legally binding NCD or Non-convertible debentures to secure your capital under this program. It also provides attractive rates of interest that stretch from nine percent to twelve percent.
You are no longer required to think about how and where to put your money. The investment possibilities described above may be the greatest places to stop, ponder, and invest if you want to put your cash in short term investment plans. If you continue to have problems, you can ask Okbima for assistance.