It is difficult to find an investment avenue that has no risk and can provide adequate returns in a short period. Investors should always review their needs like corpus and monthly or lumpsum investment. Achieving the returns that can help you beat inflation is of utmost need. If you want to simply park idle money e.g. Rs 1 lakh for 6 months, explore the options mentioned herein.Read more
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However, you must assess your financial needs and objectives before taking the final call. Analyze your monthly cash flow, decide the funds and then start investing.
Investing 1 lakh for a short term (7 days to 6 months or a year) can also attract the best interest rates or returns. Here are some of these options:
Recurring deposits come with the flexibility to invest an amount every month. They can generate an average rate of return of 3.50% to 5.50% per year, with tenures stretching from 6 months to 10 years.
Features and benefits:
Minimum amount that can be deposited is different for every bank. It only costs Rs 10.
The minimum period is 6 months, and the maximum can go up to 10 years.
It helps develop a habit of regular saving, especially for the salaried class.
The rate of interest is equivalent to that of a fixed deposit.
It offers the additional benefit of taking a loan against the deposit.
It can be funded periodically through standing instructions.
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Filled in the application form
Any government organization
Any Corporate, company, proprietor, or commercial organization
Any minor above 10 years of age
Any minor below 10 years under the guardianship
It is an interest-bearing account at a bank or a credit union. Also known as Money Market deposit accounts, money market accounts. They pay higher interest than the regular saving account.
It has the following advantages:
Higher rate of interest
Check writing Privilege
A debt instrument provides a fixed rate of interest to the lender. It can be in paper or electronic form. They can provide fixed and higher returns, thereby proving to be better than fixed deposits. The following are some examples of common debt instruments:
Debentures: They are securities that are not backed by any security. They are issued to raise medium and long-term funds.
Bonds: They are issued by the government, central bank, or large companies. They ensure payment of fixed interest rates to the lender. The principal amount is paid back at the end of the term, just like the loans.
Mortgage: This is a loan against a residential property. In case of failure, the property can be sold to recover the loan amount.
Treasury Bills: Short-term debt instruments mature within a year and can be redeemed only at maturity.
Fixed Deposit is a convenient and safe way to help your savings grow. It has the following features and benefits:
Attractive Interest rates
Hassle-free opening of accounts
Availability of short tenures
More interest with reinvestment deposit
Transfer of funds seamlessly between accounts
Automatic rollover facility
Compliant with the tax laws
Multiple scheme options
Minimum Investment Options
The Post Office Time Deposits have the following features:
Multiple lock-in periods
Income tax benefits
Revision and determination of rates
Transfer of rates to other accounts
Payment of Interest
Applicability of interest post maturity
Low minimum deposit amount
Unlimited accounts can be opened.
Transferring accounts from one post office to another is possible. And can be withdrawn prematurely.
They are safer than fixed deposits because the principal and interest are guaranteed by the government.
The investments are flexible and can start from as low as Rs. 250/-.
The nomination option is available.
Section 80 C of the Income Tax Act, 1961 allows a tax deduction on term deposits of 5 years.
Large-cap mutual funds invest 80% of the corpus in the top 100 companies by market capitalization. Here are some advantages:
These companies are leaders in their business.
They provide stable returns with low or minimal risks.
Suitable for investors who do not wish to face excess volatility in the market.
Gains are subject to 15% tax as per the Income Tax Act, 1961.
Corporate Deposits are also called company fixed deposits, where you can invest your money for a fixed period at a fixed interest rate. NBFCs and other financial institutions offer them. They pay a much higher interest rate than a traditional bank deposit. Some examples include:
Bajaj Finserv FD
ICICI Home Finance FD
HDFC Ltd FD
PNB Housing FD
Sundaram Finance Company FD
Mahindra Finance FD Scheme
Lumpsum investment is easy to make as there is no hassle of making recurring payments. However, it is imperative to examine every available alternative. Research and study before making the final decision. If you want to earn the best returns for investing 1 lakh for 6 months, you can consider mutual funds or debt instruments.
Always remember to consult a finance professional before making the final decision. Assess your risks and returns carefully to get required results.
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