2017’s 5 best short-terms investment schemes to make money
Short-term investments are usually the best option for those interested in earning significant returns on their deposits without locking in their money for too long. Fixed deposits, with their high rate of returns and additional services like online fixed deposit calculators, are still considered among the top short-term investments by most individuals.
Over the last couple of decades, the Indian population has started realizing the benefits of investing their extra money in high-earning schemes rather than letting it lie idle. With just a little effort and market research, potential investors now have a wide variety of profitable avenues that can increase their earnings. If you are new to the investment scene or would like to invest your money without locking it in for a long duration, short-term investments are your best bet.
A short-term investment can range from anywhere between 1 year to 5 years. In most scenarios, such investments are carried out to facilitate an unavoidable future expense. For example, you may have saved up for your child’s education expenses, which will escalate in a few years, but are falling short. Or you may have your eye on the ideal apartment for your family down the line, provided you can raise a little more money. When it comes to such requirements in the near future, most investors prefer to make safe bets on their accumulated capital by opting for low-risk investments.
Best low-risk short-term investment options
If you’re looking for a secure way to invest your money for the purpose of gradual, risk-free growth, the following options are ideal for you:
- Savings Account
- Still among the most preferred choices of a majority of Indians, savings accounts offer maximum liquidity. This allows you to withdraw funds anytime and anywhere without any hassles whatsoever. However, the reason this option is not the best is because it only offers approximately 4% interest rate per year. It is inadvisable unless you have constant need of all your funds.
- Liquid Funds
- Liquid funds are a type of mutual fund that invest your money in short-term government certificates or securities. It is possible for an investor to withdraw money from these funds at any time. But it is not prudent to allocate your emergency funds into this option, because gaining complete access to your money back takes around 2 or 3 days. Liquid funds offer you a comparatively higher interest rate of up to 7%. Since the money in these funds is invested in money market instruments, you can expect a comparatively higher amount of security for your investment.
- Recurring Deposits
- These deposits can be opted for in case you do not want to invest a lump sum amount in one go. Recurring deposits offer you the flexibility to invest money on a monthly basis. It is possible to open a recurring deposit account at your nearest financial institution or even at the post office. Recurring deposits from financial institutions have a minimum tenor of six months and a maximum tenor of 10 years. Remember that interest earned on them is taxable.
- National Savings Certificate (NSC)
- This investment option has a tenor of 5 years. All you need to do is visit your post office and complete a simple application process. An advantage of NSCs is that you can claim tax exemptions under section 80C of the Income Tax Act. Again, the interest earned is taxable.
- Fixed Deposits
- FDs are easily among the best options for short-term invest. They offer a high rate of return, independence from market fluctuations and interest rate volatility, and also high flexibility in terms of tenor period. You can also withdraw your deposit during times of emergency by paying a penalty. The interest on FD are taxable after your earnings cross Rs.10,000.