Short-term investment options are generally those marketable securities that can easily be liquidated into cash within three to five years. Furthermore, these short-term investments are typically used to hold excess funds for a limited time. Short-term investments are frequently used by investors to cover and meet expected near-future expenses due to their high liquidity. Short-term investments include high-yield savings accounts, recurring deposits, debt funds, and government securities, to name a few. These are the most common short-term securities, with terms ranging from a few months to one to two years. In addition to these, bank fixed deposits, post office time deposits, national savings certificates, and large-cap mutual funds are other short-term investments, with investment periods generally up to 5 years.
Investors who want short-term investing options typically aren’t interested in waiting years to see their money multiply several times over. Instead, they seek out rapid and efficient outcomes. Short-term investment strategies might save them in this situation. Let’s take a look at some of the short-term investment options to invest in
-
Recurring Deposits
Recurring deposits, or RDs for short, are a special type of term deposit provided by Indian banks. It is an investment tool that enables users to make regular investments and receive respectable returns. Due to the regular deposit factor and the interest component, it provides users and individuals with flexibility and convenience in terms of investment. But it’s important to understand that RDs are distinct from fixed deposits (FDs). RDs are generally flexible.
Recurring Deposit accounts are offered by the majority of the country’s main banks, and they typically have terms between six months and ten years, giving customers the flexibility to select the length of time that best suits their needs. However, once decided, the interest rate does not fluctuate during the period, and upon maturity, the individual receives a lump sum that includes both the regular investments and the interest earned.
click here – Aesthetic Bedroom Ideas You Could Try to Style your Room
-
Debt Instrument
Debt instruments are an excellent additional short-term investment strategy, particularly for risk-averse individuals. Debt mutual funds might be a good place to invest since they may protect capital and produce good results while avoiding market volatility.
- Liquid fund: In this fund option, investments are made in debt and money market securities with maturities of up to 91 days.
- Ultra-short-duration fund – In this type of fund, the money is invested in debt and money market securities for a term of three to six months.
- Low duration fund – Under this fund choice, funds are invested for a six to a twelve-month period in debt and money market securities.
-
Fixed Deposits
A fixed deposit, often known as an FD, is an investment option that banks and non-banking financial companies (NBFCs) provide to their clients in order to assist in their desire to save money. One can put a sizable sum of money in an FD account for a set period of time at a predefined rate of interest. Different interest rates are offered by banks for fixed deposit accounts. As one of the most secure short-term investment strategies, fixed deposit accounts can be opened for terms as little as seven days and as long as ten years. On maturity, the deposits can also be renewed and reinvested.
click here – How double entry system is different from single entry system of accounting?
-
Post-Office Time Deposits
Postal time deposits are one of the best and safest short-term investment options that generally provide investors with guaranteed returns. The scheme is offered by Indian Post and is particularly well-liked in India’s rural and remote regions. One can open a post office time deposit scheme for 1, 2, 3, or 5 years.
-
Large Cap Mutual Funds
Investments in large cap mutual funds are made in the top 100 listed companies by market capitalization. The majority of a large-cap fund’s assets under management (AUM) are invested in the equity of large companies with a strong market reputation.
-
Stock Market /Derivatives
For those with strong market expertise and a high tolerance for risk, shares, commodities, and derivatives might also be suitable options. This investment can be made for a short or long period of time, depending on the investor’s financial objectives.
-
National Savings Certificate
The National Savings Certificate is a government-sponsored program that encourages small savings. As a result of the government’s backing, the returns are usually guaranteed. It is therefore a low-risk investment. Currently, the scheme pays a set interest rate of 6.8% annually. The duration of this savings plan is five years.
Conclusion
Short-term investments are marketable securities or highly liquid assets that serve as a secure, temporary parking place for excess cash. For those who wish to see big returns on their investments in a short amount of time, short-term investments might be optimal. Additionally, investors can invest their excess funds to accomplish their short-term objectives. Investing in these schemes might help investors achieve their short-term goals, like buying a car, going on a vacation, or buying jewellery.