Are you looking to grow your wealth quickly but uncertain about where to invest your money? In today’s fast-paced financial environment, short-term investments can offer the benefit of high returns while minimising risks. Understanding the best options available is important for making informed decisions. While high returns are attractive, they often come with increased risk so having the proper knowledge is necessary. With insights from CA Twinkle Jain, Personal Finance Content Creator, we explore some of the best short-term investment options for maximising returns:
5 Best Short-Term Investment Options With High Returns
1. Liquid Mutual Funds
One of the most popular short-term investment options that you can consider to invest in is liquid mutual funds. “Liquid funds come under the debt fund category, where they invest in debt or money market instruments. The debt and money market funds would consist of liquid funds, particularly mature within a period of 91 days”, as per Groww. “Liquid mutual funds offer better returns than traditional savings accounts, and the risk is relatively low. Investors can expect returns of around 3.5%-5% annually, making it a safe choice for short-term goals”, says our expert CA Twinkle Jain.
2. Fixed Deposits (FDs)
Fixed Deposits (FDs) have long been one of the safest and most popular investment choices in India. According to our expert, “Many banks now offer special short-term FDs with tenures as short as 7 days to 1 year. The interest rates for short-term FDs range between 5%-7%, depending on the bank and the tenure chosen. Additionally, the safety of the capital is guaranteed.”
3. Recurring Deposits (RDs)
Recurring Deposits (RDs) allow you to invest a fixed amount regularly, which earns interest over a predetermined period. This is an excellent option for those who want to invest regularly without a lump sum. “It offers a fixed rate of interest, generally in the range of 5%-6.5%. RDs can be opened for as short as 6 months, making them suitable for short-term goals”, as suggested by our expert CA Twinkle Jain.
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4. Short-Term Debt Mutual Funds
Short-term debt mutual funds are good for those looking for slightly higher returns than traditional fixed-income instruments. These funds invest in government securities, bonds, and other debt instruments with shorter maturities, typically ranging from 1 to 3 years while maintaining a moderate risk level. They offer higher returns compared to FDs and RDs, with potential yields ranging from 4% to 6%.
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5. Post Office Time Deposit
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Post Office Time Deposits (POTD) are government-backed, making them a highly secure investment option. The amount invested and the interest earned are backed by sovereign guarantee. There is no cap on the maximum number of accounts that can be opened in any post office, according to Paisa Bazaar. As per the expert, “These deposits offer similar returns to bank FDs but with added government security. Interest rates are between 6%-6.8% for one-year tenures.”
Note: While these options are great for short-term goals, it's essential to align your investments with your risk tolerance and liquidity needs. Before making any finance/investment-related decision consult a financial advisor.
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