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 aim to yield substantial returns within a relatively brief timeframe, spanning from a year to just a few months. These strategies are customized to meet the anticipated near-term expenses, taking into consideration the unique financial circumstances of Non-Resident Indians.
NRIs often possess specific financial aspirations and obligations that may diverge from those of resident investors. They may prioritize investments that promise quicker and more foreseeable outcomes, rather than committing to long-term strategies that entail prolonged waiting periods.
Although short term investment plans for NRIs can deliver optimal returns to meet their financial objectives, it's essential to acknowledge that they may not yield the substantial results typically associated with long-term investment options. Nevertheless, owing to the lower risks involved, short term investment plans are frequently favored by seasoned investors, including NRIs, who seek a balanced approach to wealth management.
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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||7-11%|
|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 favored investment choice for NRI individuals. These plans provide a distinctive blend of insurance and investment, enabling NRIs to potentially increase their wealth while securing their financial future. NRIs have the freedom to select from a variety of funds that align with their risk tolerance and investment objectives. Moreover, ULIPs grant the flexibility to switch between funds, making them an appealing option for NRIs seeking to fine-tune their investments over time.
Tenure- NRI individuals have the option to open an RD account for a period as brief as 6 months, and in multiples of 3 months, up to 10 years.
Liquidity- Generally, a recurring deposit scheme for NRIs entails a minimum lock-in period of one month. In case of premature closure within one month, only the principal amount is refunded, and no interest is accrued.
Returns- RD accounts provide competitive interest rates, comparable to those of Bank FDs. Presently, for tenures of 12 months and beyond, the interest rate stands at 6.5% per annum.
Taxation- The interest earned on the invested amount is integrated into one's income and taxed based on the individual's income slab rate. TDS is deducted if the interest earned surpasses 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.
An NRI Savings Account offers a convenient and secure way to handle finances in their home country. This specialized account is tailored to meet the specific financial requirements and preferences of NRIs. It provides benefits like straightforward repatriation of funds, competitive interest rates ranging from 2-7%, and seamless online banking services.
The National Savings Certificate (NSC) stands as a favored investment choice for individuals residing abroad, seeking to safeguard their financial future. NRIs can tap into the advantages of NSC by investing through accredited banks or financial institutions. This avenue not only provides stability and security but also comes with tax benefits, making it an attractive option for NRIs looking to grow their savings.
Often referred to as NRI 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 provide secure short-term investment options for NRIs. Choices such as liquid funds, ultra-short-duration funds, and low-duration funds are tailored to different timeframes. Liquid debt funds offer excellent liquidity, surpassing savings accounts. Returns typically range from 7-9%, with taxation dependent on the investment duration.
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.
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 in India 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.
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, commonly referred to as treasury bills, present an excellent choice for short-term investments. These financial instruments offer high liquidity, allowing NRIs easy access to their funds as and when required. Additionally, they serve as a secure investment avenue, offering peace of mind. The maturity periods for these securities span from 91 days to 365 days.
Stocks, commodities, and derivatives present a promising opportunity for NRIs with a solid grasp of the market and a willingness to take calculated risks. These investments can be customized to align with either short-term or long-term financial goals.
For NRIs, considering options like NCDs (Non-Convertible Debentures) and Corporate/Company Deposits can be a wise move. These investment avenues offer appealing returns of 9-12% and are designed to align with the NRI viewpoint, guaranteeing adherence to pertinent regulations. NRI investors can take advantage of the stability and growth potential that these instruments offer.
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.
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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 should offer liquidity.
The investment should be held for a duration of no more than 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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