Short term investments are generally temporary investments to invest the excess amount in an insecure way. The period of short term investments is between 7 days to 12months. One may have future goals like buying a home or buying a luxury car. In such cases, short term investments are the best ideal. Also, for investors who would like to get their money multiplied and are interested in quick and effective outcomes, the Short term investments are the best option. The short term investments are risk-free and fetch the best possible returns to meet one’s financial objectives.
Below is the list of the best short term investments:
Fixed deposits are one of the best investment plans to invest the money. One would expect a high rate of return irrespective of market conditions and rate of interest. It allows you to withdraw the money, in case of emergency by imposing a penalty.
Savings Account, most people’s preferred choice, fetch you the maximum returns. It lets you withdraw the amount at any time and anywhere without any penalties and difficulties. However, it’s not the best investment plan for the people who always access the funds. Banks offer not more than 4% to 7 % return from a savings account.
If you don’t wish to invest a complete amount in one go, then this type of investment is suitable. Moreover, you can invest periodically just like every month for a fixed term. It’s a secured investment. This sort of investment is offered by public banks, private banks, Bank RD, Postal Recurring Deposits, financial institutions for 6 months to a maximum of 10 years. Recurring Deposit is done through online. In case, if it is closed prior to the term, then no interest is paid. It is to be noted that interest earned on Recurring Deposits is taxable.
National Savings Certificate (NSC):
This type of investment is only offered by Postal National Savings Certificate. This kind of investment is 5 years long. Therefore, one who wishes to invest in Postal NSC has to make sure that the investment term plan is 5 years exactly. The advantage of investing in a National Savings Certificate is that you can claim the tax amount under the section of the 80C Income Tax Act. However, interest earned on this money is taxable.
Liquid Funds are a sort of mutual fund offering you a higher interest rate of up to 7%. You can invest in short-period government certificates or securities. These types of investments allow an investor to withdraw money from these funds at any time. However, one must be vigilant in allocating one’s emergency funds into this type of investment plan as it takes around 2 to 3 days to have complete access to your money.