There are various factors which propel and influence your investment decisions. Among the biggest influences is your liquidity, amount of investment, risk bearing ability and objective linked planning. Among these important factors, objective linked planning is one of the major reasons for which people are motivated to invest. If you are one of those who is driven by objective linked planning then Short Term Investment Options are best suited to fulfill your goals and aspirations. In this post, we will discuss some of the main avenues available to you for Short Term Investment Options in India.
Short term investing is mainly done to fulfill some kind of personal or family needs. It can be that you want to buy a car, want to go on an annual vacation, want to gift a diamond jewelry set to your beloved, wanted to have the admission of your kid or want to do a down payment of a new flat. The need and requirements of short term investment may differ from one person to another, but all require the helping hand of various short term investment options to invest and grow their money so that they are successful in fulfilling their dreams and aspirations. We will discuss one by one the various short term investment options in India available to you.
Short Term Investment Options
Saving Account: Savings Bank Account helps to develop the habit of saving money with the dual advantage of liquidity and return on your savings. The rate of return on Saving Account is low to moderate. So if you are looking for safety of your money and liquidity you can surely go for it. It also gives the flexibility to invest whatever amount you desire. So in one month your savings can be low and in another your savings might go up.
Short Term FDs: If you have a lump sum amount to invest then Short Term Fixed Deposit (FD) is one of the safest ways of short term investment option. It gives a higher return than a saving’s account, and you can use your money after the deposit period is over. So if you require money after a particular period then you can surely go for short term FDs.
Recurring Deposits: If you want to accumulate money for a particular and special purpose and do not possess a big amount of funds but are sure of regular monthly inflows then you should go for Recurring Deposits. In RDs, you are required to put a regular sum for a definite period. RDs have interest rates similar to FDs and can be availed for a period ranging from 6-24 months. So RDs are for those who do not have a large corpus of money to invest but have regular monthly income and are looking for safe and risk free short term investment option.
Liquid Short Term Funds: It is a specialized form of mutual funds that invest your money for a short period ranging from 90 to 365 days in fixed income options. They include instruments like treasury bills, commercial paper, certificates of deposits, etc. They provide better returns than savings account together with capital protection and liquidity.
Fixed Maturity Plans (FMPs) / Monthly Income Plans (MIPs): FMPS and MIPs are short term investment instrument which primarily focus on investing in bonds and fixed deposit with a little amount of investment; say 15 percent to 25 percent in equities. While FMPs have a fixed period, MIPs can be purchased and sold at any time. So they are best for those who are willing to take some risk from the investment point of view. Returns are usually higher than FDs but are not guaranteed.
Commodities: If you have been looking for some lucrative gains and are willing to increase your risk taking ability then Investment in Commodities can be a choice for you for short term investment options. You can invest in gold, jewelry, e-gold, gold ETFs, etc through stock exchange futures segment. It can give higher returns, but you have to be predictive about a trend over a period of time to gain benefits else you may face losses too. So this type of short term investment requires some prior knowledge of futures segment, the risk taking ability and a good amount of money to invest in the Commodities.
Corporate FDs: Corporate FDs have 1-2 years of time horizon and have the potential to give a return of 9 to 13 percent per annum. But they carry credit risk and are unsecured at the same time. So they require a good study of the instrument and proper home work from the investor before deciding to invest in a particular Corporate FD.
So you have ample number of short term investment options in India by which you can fulfill your short term goals. You can adopt any one of these, or you can choose to go for a mixed portfolio. Each option described above have its own set of liquidity, maturity period, rate of return and risks associated with it. You can select a particular short term investment option depending upon your financial liquidity, fund corpus, risk taking ability and amount of return excepted from your invested sum of money. Thus carefully selecting from the short term investment options in India you can grow your money to fulfill your varied objectives in life.