short-term investment- I just want to tell you first that you should always go with long-term investment whenever it is possible.
If there is any kind of need that you have to invest in some short-term instruments then do not select it.
Because long-term investment can help you more than a short-term investment.
It can fulfill many of your dreams, as well as the possibility to be at loss, is also very low in long-term investment plans.
But there are also some good short-term investment plans available in the market.
First, we will talk about some investment options for 1 year that will give you a decent return.
What is a short-term investment?-
You can call the short-term investment a temporary investment. Or it means that type of investments which you do for 1 to 5 years.
The short-term investment means that you can easily convert your investment amount into cash.
There are many such investment options that we can count into short-term investments.
Like- Fixed Deposit, Bonds, NSC ( National Saving Scheme ) E.T.C.
We will discuss the best 5 options here.
Examples of short-term investment-
- Recurring Deposit-
In the Fixed Deposit, you need to invest a lumpsum amount.
But in Recurring Deposit you have to invest a fixed amount every month.
You can select the tenure of the recurring deposit.
But in most of the banks, the minimum tenure is 6 months or 1 year.
So, in RD you can get 5 to 6 percent interest.
You can start with 500 or 1000 rupees per month or if you can then you can invest more.
But I want to clear you one thing that is- suppose you started with the tenure of 1 year.
But after few months if you want to increase your investment amount then you can’t do that.
If you want then you can start another Recurring Deposit, but you can’t change anything on your existing recurring deposit.
It is a type of secure investment.
If you want to open a recurring deposit then you can open it through internet banking, mobile banking.
You don’t need to visit the bank to open this.
But if you want then you can visit the bank to open a recurring deposit.
If there is an emergency and you want to pre-close your RD then also you can do it easily.
The bank will not charge any amount for that from your principal amount.
- Fixed Deposit-
This is one of the most preferred investment options among us.
We are very much habituated to invest in FD. It is also a secure type of investment.
You can get up to 9 percent as interest in FD.
But most of the banks are giving 5-6 percent interest. But if you are a senior citizen then you can get a little bit more.
You can open an Fd in any bank you are using. Or you can also open an FD in the post office near you.
If you don’t want to visit the bank then you can open an FD by using internet banking or mobile banking.
Here also you can select the minimum tenure of 6 months or 1 year in most of the banks.
If you are using some small banks then you can start with 500 rupees or 1000 rupees.
As I said before if you want then you can pre-close it whenever you want.
You can also choose any non-banking financial corporation to open an FD.
But research well before that. Don’t always run for high-interest rates.
If everything is ok, then you can select it.
- Invoice Discounting-
This may be very new to many. But trust me it is not a new concept.
Generally the small businesses this concept when they need working capital.
Now let’s understand-
What is Invoice Discounting?
Let’s take an example-
Pepsi company is buying bottles from a seller. So here the Pepsi company is the buyer.
Now the seller may be supplying bottles to various buyers.
But I will make you understand with the example of the Pepsi company as a buyer.
Now let’s assume that the seller is selling bottles of 100 rupees to the buyer.
Now you should know that CREDIT is very normal in the business.
So, the Pepsi company will not pay immediately to the seller.
Let’s assume that they will pay after 90 days.
But this 90 days period is very long for the seller.
The seller needs the money instantly.
Now the seller will contact an investor and will take money instantly from the investor in exchange for the INVOICE of the bottles, the seller sold to the Pepsi company.
Here the investor will charge interest from the seller because the investor needs to wait 90 days to get the money from the Pepsi company.
The seller has no problem paying interest to the investor.
So, after 90 days the Pepsi company will pay the investor directly, and this way the investor can earn money.
Here the investors can be the banks, retail investors, high net worth individuals E.T.C.
The advantages of Invoice Discounting as a short-term investment–
- One of the best short-term investment options.
- Higher fixed return.
- Less volatility.
- Good diversification option.
- Anybody can invest online.
- High liquidity.
How to invest in Invoice Discounting?-
You can invest through Trade Cred.
It is the NO.1 Invoice Discounting platform in India with the ZERO default rate.
Previously it was mainly for HNI ( High net worth investor ), who can invest here. But now the retail investors also can invest here.
Just remember if you want to sell before the time then you can also do that.
But that is mainly dependent on Demand and Supply.
As we know everything has a risk factor so I would suggest you that work with some good and reputed brands like- Amazon, Godrej, E.T.C.
As well as if you are an investor then try to do some research to mitigate the risk.
Like- the buyer’s repayment history, the reputation of the seller and buyer E.T.C.
National Saving Scheme-
It is also a very good short-term investment option.
You can avail this scheme from the post office near you. It is a one-time investment with a tenure of 5 years.
You will get the nomination facility here. You can open a single or joint account here ( Max 3 adults ).
You can start your investment here, with a minimum of 1000 rupees.
It is also a risk-free investment.
But here you can’t withdraw your amount before maturity until there is a very emergency like death.
Here you will get a tax deduction under 80C up to 1.5 lac. The current interest rate of this scheme is 6.8 percent.
Debt means loan. The debt mutual funds provide loans to companies or the government.
Sometimes the companies need money to grow their business.
But they don’t want to issue their shares. Because they don’t want any shareholders.
So, they take loans from the public and agreed to give a fixed interest rate against the loan amount.
The same goes for the government.
The government can also take loans to run a project or to maintain their expenses by giving a decent interest.
Here, the average interest rate you can get is 7-8 percent.
The liquidity is also very high in the debt funds. As well as the volatility is very low.
Which is a very positive sign.
Many of us don’t want to keep money in the saving account because the interest rate in the saving account is very low in most of the banks.
Sometimes the interest rate fails to beat inflation also.
But the IDFC bank is giving Up to 7 percent interest in the saving account.
And I think you know that this is similar to the other banks available in the market.
So, your money will be secured. Nothing to worry about this.
You can open this online also. Or you can visit the bank.
There are many other banks also that are giving a decent interest on saving accounts.
Like- RBL bank, Jana Small Finance Bank, E.T.C.
I just want to clarify that I am not promoting any banks here. This is just to inform you.
So, before opening an account in any bank, first, do your research and try to know all the pros and cons of these banks.
Also, there are some genuine ways to get up to 8 percent interest on any saving account.
Yes, you can select this also as a short-term investment. You can earn good money if you invest in liquid funds.
The liquid funds invest in bonds, government securities, debentures.
So, you can understand that it is investing in debt instruments.
The liquid funds can only invest in that instruments which’s maturity period is less than 91 days.
But it does not mean that you can invest only for 91 days or less than that.
You can invest as long as you can or want.
Because after completing 91 days in a company, the fund manager will re-invest the money in another company.
So, you can invest as long as you want.
Here you can get 6-9 percent interest approximately.
As it is a very short-term investment, so it is assumed that it is a very low-risk fund.
As well as it is very flexible to invest.
If you have a DEMAT account then you can invest through that.
Or if you don’t have a DEMAT account then you can use any trusted online option to invest in.
Short-term investment plans in mutual funds?
You can choose Debt funds or liquid funds as a short-term investment plan in mutual funds.
Otherwise, you should invest in the long term to create wealth or to achieve your big goals.
Short-term investment in share market?
Investing for less than 5 years in the stock market is considered a short-term investment.
You can do intraday trading for that.
But I suggest you don’t do intraday trading without having proper knowledge.
Always try to invest in the long term. Otherwise, you can be at loss.
What is the best investment for the short term?
There are many short-term investment options like-
* Fixed Deposit.
* Post-office time deposit.
* Government bonds.
* Debt mutual funds
How can I grow my money fast?
The one and the only way to grow your money fas is investing. You have to invest your money. Then only you will be able to grow your money fast.
When you are deciding to invest your money choose the profitable options to invest in. That should be according to your goal.
What are the risks of short-term investments?
If you are investing your money in the stock market then the answer is- Volatility.
It is one of the main reasons for the risk in short-term investment.
But if you are investing in a very low-risk instrument or some secure investment option like FD then there the risk is greatly reduced or almost does not exist.
If you have any queries left on this topic, then please comment below.