People always want to increase their money and they choose the safest option of money savings by investing it for 3-5 years. They re-invest the matured amount for another short period and the cycle goes on like this but do the investors get a reasonable amount with respect to increase in inflation.
Short term commonly indicates an investment period of less than five years and Indians are more likely to invest in following short term investment plans:
• Savings account – A tradition but safest and easiest way to access your money. You commonly get 4-7% of returns from your bank but some banks like kotak offers its customers 6% returns and Yes bank offers 7% returns.
• Liquid fund – A type of mutual fund which invests in short term securities and bonds e.g. certificate of deposits, government securities etc. It is reasonably secure and you can enter or exit at any point of time.
• Ultra Short Term Fund – It is slightly riskier than the liquid fund and invest in short-term(90 days to 1.5 Years) debt securities. It can give you higher returns than the liquid fund but it carries an exit load ranges from 0.1-1%.
• Fixed Maturity Plans – It acts similar to bank FDs and considered as debt mutual funds. They don’t have interest rate risk and can give you higher returns as compared to bank FDs and they are also very tax efficient. These are currently available for minimum 3 years time period.
• Arbitrage Funds – These are just like equity mutual funds and If you are holding them for more than one year then they are more tax efficient. You can expect around 8% post tax returns with this investment plan.
• Bank FDs or Postal Term Deposits – The most popular method of investment from decades but these are taxable whether they are normal type or tax saving FDs. It is suggested to go for online FDs as they can be easily monitored and you can get the maturity amount in your account if you redeem it online.
• Recurring Deposits – It is a secured investment and mainly for those who want to invest monthly rather than investing a lump sum amount. It doesn’t give any tax benefits as the maturity amount is taxable.
• sip investment plans – It is a method of investing a fixed amount in mutual funds scheme monthly or quarterly over a time period. This method utilizes the power of two investment strategies i.e. Rupee Cost Averaging (gives you benefit from volatility) and Power of Compounding (which gives you higher returns on small investments). The other benefits of this method is:
? you need not to invest large amount
? no need to monitor the market by yourself because experts will do it for you
? gives higher returns in short period of time
? it is a disciplined method of investment
All the above short term investments are able to grow your money but Systematic Investment Plan or SIP can help you in achieving your dreams and objectives more easily with its dual benefit giving strategies works through investing in different securities.
Investguru.in is the first online platform that compares various investment plans and helps you to choose the best investment plan in India for Child Education, Retirement Planning, Wedding Planning and others. To know more about investment plans follow this link: Equity Mutual Funds For Entrepreneurs and Best Mutual Funds For Beginners.