When you need to park your money safely for just a month, finding the best investment plan for 1 month requires a focus on liquidity, safety, and minimal risk. Here’s a comprehensive guide to the most effective short term investment options, including how popular products like SIP plans and ULIP plans fit into the picture.
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Investment Plans
Generate wealthEarn 1 Cr# in maturity with Zero LTCG tax¶
Double tax savings^On premiums (under 80C) and on maturity (under
10(10D))
Short term investment refers to financial instruments or assets that are held for a brief period-typically from a few days up to a year. Investors choose these plans to preserve capital, earn moderate returns, and maintain the flexibility to access funds quickly. For a 1-month horizon, the focus is on maximum liquidity and low risk.
A savings account Easiest and safest option for a 1-month period.
Offers immediate liquidity and minimal paperwork.
Returns are modest but capital is secure.
Liquid Mutual Funds
Invest in high-quality money market instruments.
Allow redemption within 24 hours, making them ideal for very short periods.
Returns are higher than savings accounts but still relatively safe.
Ultra Short Duration Funds
Slightly higher risk than liquid funds but still focus on short-term debt instruments.
Suitable for holding periods from 1 week to a few months.
Examples: HDFC Ultra Short Term Fund, Axis Ultra Short Duration Fund, ICICI Prudential Ultra Short Term Fund, all offering around 7%–8% annualized returns.
Treasury Bills (T-Bills)
Government-backed securities with a minimum maturity of 91 days.
Not ideal for exactly 1 month, but can be considered if you can wait for the next maturity cycle.
Extremely low risk investment option.
Money Market Funds
Similar to liquid funds, these invest in short-term debt and money market instruments.
Offer higher returns than savings accounts, with high liquidity.
Slightly higher returns than savings accounts, but premature withdrawal may attract penalties.
Key Points to Consider While Choosing the Best Short Term Investment Plan for 1 Month:
Liquidity:
Ensure you can access your funds quickly, without penalties.
Safety:
For such a short period, prioritize capital protection over high returns.
Returns:
While higher returns are attractive, they often come with higher risk or lower liquidity.
Summary Table for 1 Month Investment Options
Option
Ideal For
Key Benefit
Drawback
Savings Account
Absolute safety
Instant access
Lowest returns
Liquid Mutual Funds
Low risk, higher yield
Quick redemption
Slight NAV fluctuations
Ultra Short Duration Fund
Slightly higher return
Suitable for 1 month+
Small risk, not for 1-2 days
Fixed Deposit
Short lock-in
Predictable returns
Penalty on early withdrawal
Conclusion
For those seeking the best investment plan, options like savings accounts, liquid mutual funds, and ultra short duration funds stand out for their liquidity, safety, and reasonable returns. Always align your choice with your risk tolerance, liquidity needs, and financial goals to make the most of your short term investment.
FAQs
Are SIP plans suitable for 1-month investments?
No, SIP plans (Systematic Investment Plans) are designed for long-term wealth creation and work best when invested over several months or years. For a 1-month investment, a lump sum in a liquid or ultra short-term fund is more appropriate.
Can I invest in ULIP plans for just 1 month?
No, ULIP plans (Unit Linked Insurance Plans) have a mandatory lock-in period of 5 years. They are not suitable for short term investment or for a 1-month holding period.
How do liquid mutual funds work for short term investment?
Liquid mutual funds invest in high-quality, short-term money market instruments. They provide higher returns than savings accounts and allow you to redeem your investment within 24 hours, making them ideal for short term investment like 1 month.
Is a fixed deposit a good option for 1 month?
Some banks offer fixed deposits as short as 7 days. While they offer slightly higher returns than savings accounts, premature withdrawal within 1 month may result in penalties or lower interest rates. Always check the terms before investing.
What are the risks involved in short term investment for 1 month?
The main risks are low returns and, in some cases, minimal capital loss due to market fluctuations (as with liquid funds). However, most recommended options for 1 month-such as savings accounts and liquid funds-are very low risk.
Can I withdraw my money anytime from a liquid mutual fund?
Yes, you can usually redeem your investment from a liquid mutual fund at any time. The proceeds are credited to your bank account within 24 hours on business days.
How do I choose between different short term investment options?
Consider your priorities-liquidity, safety, and returns. For absolute safety and instant access, a savings account is best. For higher returns with low risk, opt for liquid mutual funds or ultra short duration funds.
˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.
Past 10 Years' annualised returns as on 01-07-2025
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in 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
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).
Generate wealth Earn 1 Cr# in maturity with Zero LTCG tax¶
Double tax savings^ On premiums (under 80C) and on maturity (under 10(10D))
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