In India, there are several short-term investment options available for individuals looking to park their excess cash in highly liquid assets that can be easily converted into cash within a period of 5 years. These options are specifically designed to provide a safe and temporary avenue for investment.
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Short term investments, especially from an NRI perspective, are designed to provide considerable returns in a relatively brief span of time, which can range from a year to just a few months. These investment plans are tailored to meet expected near future expenses, taking into account the unique financial considerations of Non-Resident Indians.
NRIs often have specific financial goals and responsibilities that may differ from resident investors. They may prioritize investments that offer quicker and more predictable results, rather than opting for long-term strategies that require extended periods of waiting.
While short term investment plans for NRIs can yield optimal returns to fulfill their financial objectives, it's important to note that they may not yield the massive results associated with long-term investment options. Nonetheless, due to the lower risks involved, short term investment plans are often favored by seasoned investors, including NRIs, seeking a balanced approach to wealth management.
Short turnaround time
Optimum returns for less investment
Lesser investment amount
Now that you know about the highlights of the best short term investments option in India.
Here are the top 13 best short-term investment plans in India.
Let’s take a look at the Best short term investment options to invest in 2023.
ULIP (Unit-Linked Insurance Plans)
National Savings Certificate
Investments in NCDs/Corporate or Company Deposits
Bank Fixed Deposits
Post-office Time Deposits
Large Cap Mutual Funds
|Investment Options||Yearly Returns (in %)|
|Money Market Account||5-9%|
|National Savings Certificate||6-8%|
|Investments in NCDs/Corporate or Company Deposits||8-11%|
|Bank Fixed Deposits||5-8%|
|Post-office Time Deposits||5.5%|
|Large Cap Mutual Funds||8-13%|
ULIPs, or Unit Linked Insurance Plans, are a popular investment option for NRIs. These plans offer a unique combination of insurance and investment, allowing NRIs to potentially grow their wealth while ensuring financial security. NRIs can choose from a range of funds based on their risk appetite and investment goals. Additionally, ULIPs offer the flexibility to switch between funds, making them an attractive choice for NRIs looking to optimize their investments over time.
Tenure- NRIs can open an RD account for a tenure as short as 6 months and in multiples of 3 months, up to 10 years.
Liquidity- Typically, a recurring deposit scheme for NRIs comes with a minimum lock-in period of one month. In the event of premature closure within one month, only the principal amount is returned, and no interest is paid.
Returns- NRI RD accounts offer competitive interest rates, on par with Bank FDs. Currently, for tenures of 12 months and above, the interest rate is 6.5% per annum.
Taxation- The interest earned on the invested amount is added to one’s income and taxed according to the individual's income slab rate. TDS is deducted if the interest earned exceeds Rs. 10,000.
**You can use the online FD calculator to analyze potential returns before making an investment decision for short term investments in india.
For Non-Resident Indians (NRIs) seeking to manage their finances from abroad, an NRI Savings Account provides a convenient and secure way to deposit and manage funds in their home country. This specialized account is designed to cater to the unique financial needs and preferences of NRIs. It offers features such as easy repatriation of funds, competitive interest rates of 2-7%, and seamless online banking services.
National Savings Certificate (NSC) is a popular investment option for Non-Resident Indians (NRIs) looking to secure their financial future. NRIs can avail of the benefits of NSC by investing through designated banks or financial institutions. The NSC offers a stable and secure avenue for NRIs to grow their savings while enjoying tax benefits.
Often referred to as money market accounts, NRI Liquid Funds offer a secure way to preserve capital while providing respectable returns. They are considered one of the best short-term investment options in India for Non-Resident Indians.
Tenure - NRIs can open a money market account for a duration of less than 13 months, providing flexibility in managing short-term finances.
Liquidity - This short-term investment option in India is highly liquid, allowing NRIs to redeem their investments swiftly when needed.
Returns - While returns on liquid funds are not guaranteed or fixed, they currently offer an interest rate of 7% per annum.
Taxation - Profits earned on the invested amount in this short-term investment plan are added to the income of the individual and taxed accordingly. However, profits earned on investments held for more than 36 months are taxed at 20% post-indexation.
Debt instruments offer secure short-term investments for NRIs. Options like liquid funds, ultra-short-duration funds, and low-duration funds cater to various tenures. Liquid debt funds provide high liquidity, outperforming savings accounts. Returns range from 7-9%, with taxation based on tenure.
Fixed deposits, also known as short-term savings instruments, allow individuals, including NRIs, to invest a lump-sum amount in a bank for a fixed period. It is considered one of the safest short-term investment options in India, offering a fixed FD interest rate and providing guaranteed returnS.
In terms of tenure, NRI investors can choose durations ranging from 7 days to 10 years. Deposits can be renewed upon maturity for reinvestment.
This short term investment option ensures high liquidity for NRIs and helps manage reinvestment risk effectively.
Returns on NRI fixed deposit accounts are assured, with interest rates ranging from 8% to 9% for investments over a year. Importantly, these rates remain stable even in times of market volatility.
Regarding taxation, it's important for NRIs to be aware that FDs can attract a high-income tax rate of up to 30%, including on accrued interest.
Post-office time deposits are one of the safest and best short-term investment plans, offering assured returns. The scheme is provided by India Post and is particularly popular among people residing in rural and remote areas of India.
Tenure- NRIs can open a post office time deposit scheme for a tenure of 1 year, 2 years, 3 years, or 5 years.
Liquidity- In the post office scheme, the interest is calculated on the deposited amount annually. Premature withdrawal is not allowed within the first 6 months.
Returns- The post office time deposit account offers competitive return rates. Below are the returns:
|Account Tenure||Applicable Interest Rate|
|1 year account||6.9%|
|3 years account||7.0%|
|5 years account||7.5%|
Taxation- The interest earned on the deposited amount is added to the income of the individual and is taxed according to the income tax slab rate the individual falls under.
Large-cap mutual funds are short-term investment plans in India where the investment is made selectively in the stocks of large business organizations to achieve substantial growth in a shorter period of time. These excellent small investment plans can give you quick and smart returns within 1 to 3 years of investment tenure.
Tenure- One can invest in the large-cap mutual fund for the tenure of 3-5 years.
Liquidity- The large-cap mutual fund scheme offers high liquidity to the investors along with high returns on investment.
Returns- As a safe short-term investment option, the risk involved in large-cap mutual fund investments are low and offers a high return of 8%-13%
Taxation- Capital gain tax is charged on debt funds. The Short-term capital gain tax (STCG) is applicable to the capital gains earned on the fund which is held for the tenure of 3 years. Long-term capital gain tax is applicable on the capital gains earned on the fund which is held for the tenure of more than 3 years.
Treasury securities, also known as treasury bills, stand as an excellent option for short-term investments. These instruments provide high liquidity, ensuring that funds can be accessed easily when needed. Moreover, they offer a safe haven for investment, providing NRIs with peace of mind. The maturity dates of these securities range from 91 days to 365 days.
Shares, commodities, and derivatives are a favorable avenue for NRI individuals possessing good market knowledge and a high-risk appetite. This investment can be tailored to suit short or long-term financial objectives.
For Non-Resident Indians (NRIs), exploring avenues like NCDs (Non-convertible debentures) and Corporate/Company Deposits can be a prudent choice. These investment options offer attractive returns of 9-12% and are tailored to suit the NRI perspective, ensuring compliance with relevant regulations. NRI investors can benefit from the stability and potential for growth that these instruments provide.
For Non-Resident Indians (NRIs), short-term investment opportunities work in a similar way. NRIs can take advantage of their strong cash position to invest surplus funds in different short term investment options in India. The primary goal of short-term investment plans for NRIs is to ensure capital protection while earning attractive returns on their investments.
This is a short-term bond, generally less than 90 days which offers returns in form of interest payments. As compared to the other investment option, cash investment generally offers a low return.
These are investment securities which provide high liquidity and have high credit quality. As a short-term investment option, these securities have low-risk and low-return profiles.
Money market is the segment of the financial market in which financial instruments which have a short-term maturity period and high liquidity are traded. Money-market funds are considered a very safe short investment option. However, the returns are comparatively low as compared to the other investment options.
These are liquid assets, which derive profit from ownership claim or contractual right. Stocks, cash, bonds, mutual funds, and bank deposits are some of the examples of financial assets.
This is a conservative investment fund which offers low risk and high returns. Short-term investment funds are considered a liquid investment fund and a safe investment option to achieve short-term financial objectives.
Now you don't need to ponder anymore on issues like where and how much to invest. If you're looking to invest your money in short-term investment plans in India, then above mentioned investment options could be the best destinations for you to invest.
It provides liquidity.
Investment should be made for a short-term period of 12 months
Past 10 Year annualised returns as on 01-12-2023
^Tax benefit are for Investments made up to Rs.2.5 L/ yr and are subject to change as per tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
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