Short Term Investment

Best Short Term Investment Plans for 2017

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For anyone looking to make the maximum the benefits on their hard-earned investment money quickly and effectively, there is perhaps no better option than Short Term Investment Plans. Often, these Short Term Investments are made with an intention to earn significant returns within a short tenure of investment quickly – maybe within a year or sometimes even lesser.

For those of you who are typically unaware of what exactly is a short term investment, here’s a quick definition of the same. Any investment that yields enough potential to multiply investment in shorter time period of 1 to 5 years is typically referred to as short term investment.

Unlike long term investments, short term investments are made to meet the financial needs at hands. It ranks the popularity charts mostly amongst impatient investors who just can’t wait for years to get their money multiplied. A short term investment is characterized by some common factors:

  • Investment tenure (< 1 year)
  • High liquidity
  • Keeping the principal intact
  • Getting an optimum return

While investing for a short term, expecting massive returns could prove to be a grave mistake. The right approach is to have a more realistic objective and expect optimum returns.

If you too are looking to invest your money in short term investment plans, you will be pleased to know that there is a plethora of investment options available at your disposal. Here we are listing some of the best short term investment options for 2017 and beyond.

Before we divulge any further details about these short term investment options, let’s us show you a preview and get you acquainted with the pros and cons of the same.

Short Term Investment Plans List

 

Investment Options

Pros

Cons

1.

Savings Account

No risk

High liquidity

Low rate of returns

2.

Liquid Funds

High liquidity

No lock-in period

Low rate of returns

3.

Debt Instruments

No risk

Optimum rate of returns

Low liquidity

4.

Gold

High rate of returns

High liquidity

High investment price

5.

Bank Fixed Deposits (Bank FDs)

Optimum rate of returns

Low risk

Low liquidity

6.

National Savings Certificate (NSC)

  • Income tax exemption
  • Safe investment
  • Low return for 5 years
 
7.

Bonds

  • Risk free
  • High Liquidity

Low rate of returns

8.

Treasury Bills

  • High Liquidity
  • Low risk

Low rate of returns

9.

Fixed Maturity Plans

  • High interest rates
  • Risk free
  • Fixed lock in period
 
10.

Short Term Floating Rate Funds

  • Low risk
  • Higher Yield
  • Limited Liquidity
 

Now that you know about the top 10 best short term investment plans available at your disposal and their pros and cons, it’s time to get to know these short term investment plans in greater details.

1. Savings Account - Cut out the frill, get a plain savings account. It is perhaps the most simple and smart short term investment. The returns might not be substantial, but your capital value remains intact so you have nothing to lose here. Top it up with the ease of depositing and withdrawing the money; what more can you ask for? Some banks may offer high interest rates on savings account on the condition that the investor will have a substantial minimum balance in the account. Let’s check out some pros and cons of this short term investment option.

2. Liquid Funds - It is a variant of mutual fund in which the investment is made in those short-term market instruments that have the least volatility such as government securities and treasury bills. These money market instruments come with a maturity up to 91 days. Liquid funds are the least risky among mutual funds as there is no mark to market (MTM) involved. Easy liquidation is what gives liquid funds an edge over other types of investments.

3. Debt Instruments - The investment made in debt instruments is intentioned at securing the capital rather than getting a return. Investing in debt instruments is preferred by investors with a low appetite for risk and a fear of market volatility. With a potential to yield up to 10.5% returns (prior to tax deduction), this form of investment is a steady way to mint some smart money within a short tenure.

4. Gold - Gold is an evergreen best investment plan, both for short-term and long-term. The market value of gold fluctuates in a very agile manner on a day to day basis and shows a tendency to always go up. Buying gold ETFs serve the same purpose as buying physical gold. The high price is the only stumbling block in making an investment in gold.

5. Bank Fixed Deposits (Bank FDs) - Bank Fixed Deposits has always been a favourite among Indian investors. FDs offer the investors a higher rate of return than a savings account (almost twofold). The rate of return remains constant throughout the maturity term. The term can be anywhere between 7 days and 10 years, but most of the investors go for a 1 year tenure. The investor should avoid withdrawing the money before the maturity term as it incurs a penalty. With a potential to yield up to 10% rate of return, FD is best for investors with a low appetite for risk.

6. National Savings Certificate (NSC) – One of the best bets for those looking to invest their money for short term,National Savings Certificate offered by the Postal Department of India, is both a long term and a short investment plan that has its weight worth in gold. For short term, one can invest in NSC for a minimum span of 5 years and earn a good return on the investment. In addition, the maturity proceeds of this investment is exempted from income tax. However, the interest accrued on it is taxable. 

7. Bonds – Ranking alongside some of the most sought after short term investment plans, government bonds are risk free investment that offer investors with fairly high liquidity. This amazing short term investment scheme offers a good a fixed rate of interest per year on the principal amount. Bonds ensure that investors get back their principal amount plus the interest proceeds on the maturity date. No wonder, it is so popular amongst people looking forward for a diverse short term investment portfolio.

8. Treasury Bills – With lucrative return on investments, Treasury Bills issued by RBI remain yet another brilliant short term investment plans. These are available for purchase at the auctions held by RBI every month. The minimum investment amount for treasury bills is Rs. 1 Lakh and the maturity period is between 91 to 364 days. It makes for the best bet for those looking for low risk investment and safer returns.

9. Fixed Maturity Plans – If you are looking for risk-free short term investment plans, Fixed Maturity Plans are your best option. Fixed Maturity Plans are absolutely risk-free and can help you get fairly higher rate of interest on your investment. Fixed Maturity Plans are close ended debt schemes that come packed with a lock-in period of at least 3 years. 

10. Short Term Floating Rate Funds – If you are the one who believes in ensuring a steady flow of periodic income, Short Term Floating Rate Funds could be your best friend. These open ended investment schemes are carefully designed and thoughtfully conceptualized to ensure steady flow of income for investor for a predetermined period of time. 

Now it’s Your Turn!

These are just 10 of the best short term investment plans for 2017 and beyond. It makes sense to align short term investment goals in your long term investment plans to ensure maximum savings and minimum risks. But before you jump into action and choose one of the above mentioned short term investment plans, be advised to consult an advisor to understand which of these can help you get maximum returns based on your investment requisites and risk appetite. 

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