Short Term Investment Plans draw a lot of investors, due to their convenience and ease. If you’re wondering where to invest money for a short period and get maximum returns, this blog is for you.
While it is ideal to consult a Cube Wealth Coach before taking any investment decisions in this piece we’ll take a closer look at the best short term investment option for 2023!
What Are Short-Term Investment Plans?
Any investment option that is for a short duration can be classified as a short-term investment option. The lock-in period for these can be anywhere between 7 days to 12 months.
These short term plans come with the lure of higher returns and shorter lock-in periods. That means, unlike long term investments that require more patience and discipline - short term investment options are easier to commit to.
These offer faster liquidity and are mostly lump sum investments. The risk level on short term plans and funds should be carefully assessed as high-returns often times come with higher-risk or lock-in periods.
However, most short-term investment plans offer healthy returns and lower risks since the maturity period is shorter.
Examples Of Short-Term Investment Options
1. Liquid Funds
Liquid funds fall under the debt funds category. A liquid fund is considered to be an ideal short term investment because its portfolio matures in 60 to 91 days. Moreover, returns generated by liquid funds are relatively consistent.
Cube gives you access to the Cube ATMfeature thatlets you withdraw money instantly from Nippon India Liquid Fund investments to your bank account.
2. Debt Funds
A Debt fund is a mutual fund that invests only in fixed income securities like bonds and treasury bills. Such funds are considered safer than equity funds and can be invested in for the short term.
Your returns will be anywhere between 8% to 12% depending on how the fund performs. You can read more about the best debt funds in India here.
3. Fixed Deposits
Classic Bank Fixed Deposits are safe for short term investment seekers. There's can range anywhere between 7 days to 5 years depending on how you define short-term but the ideal duration is at least 3 years.
You invest a fixed lump sum and then choose to renew the fixed deposit at maturity or withdraw funds if.However, you should know that many banks do not let you withdraw fixed deposits prematurely.
Therefore you must be careful while investing if liquidity is a key driver for you.
Interest payouts for an FD can be monthly, quarterly, half-yearly, yearly or cumulative. You can around 6.5 per cent per annum for an FD of 12 months or more. Though some banks may offer up to 7.60% to senior citizens. Interest earned is taxable and TDS is cut for interests of over Rs.10,000.
You can read more about FDs Vs Mutual Funds here.
4. Fixed Maturity Plans
Fixed Maturity Plans are also essentially debt funds but are close-ended. That means an investment here can only be made when a new fund offer is out. These plans invest your money in highly rated securities, corporate bonds, and other debt instruments.
Returns are usually higher than a savings account or a Bank Fixed Deposit. Taxation remains similar to debt funds. Read more about debt funds here.
5. Recurring Deposits
A recurring deposit is almost like a systematic investment plan for a fixed deposit. It offers investors the option to deposit a fixed amount each month and earn a fixed interest on it.
However, compared to an FD it will earn slightly lesser as you are not doing a lump sum investment. Interest rates are similar to fixed deposits and range from 5% to 7% depending on the bank.
6. P2P Lending
P2P lending on Cube Wealth lets you become a lender with two RBI Certified P2PNBFCs, Faircent and LiquiLoans. The lock-in period ranges from 3 months to 12 months and the returns vary from 8.15% to 12%.
Why Invest in Short-Term Mutual Investments?
The key benefits of short-term investment plans are four-fold: they offer healthy returns compared to your savings bank account, they offer easy liquidity, they can aid tax-saving and have short maturity periods.
Best Short-Term Investment Options
If you're seeking healthy returns over a short term horizon then Mutual Funds are the way to go. We've picked the best short term investment options for you on the basis of multiple factors listed below:
- Qualitative Parameters
- AMC comfort – Pedigree, Credibility, Compliance, Process and Ability to Retain Top Management & Talent
- Fund Manager comfort – Experience, Reputation, Performance and Continuity Record (We have had 170+ investment and marketing team interactions in the last 1 year)
- Quantitative Parameters
- Scheme Aesthetics - Fund Size & Recent AUM Growth, Concentration Analysis, Clarity of positioning
- Performance - Historical performances (SIP, Last 20-Quarters, 3-Year and 5-Year Numbers), Risk-adjusted returns, Sharpe, Beta and Other Statistical Ratios
- Negative Criteria – Cash Calls, Outlier Performances, Recent Management Changes, etc.
Given below is a list of the current top recommendations of the best short term investment mutual funds. Please contact a Cube Wealth Advisor for a free consultation call.
Top 6 Short Term Mutual Funds |
Nippon India Liquid Fund |
HDFC Liquid Fund |
SBI Liquid Fund |
IDFC Ultra Short Term Fund |
Axis Banking and PSU Debt Fund |
HDFC Money Market Fund |
What Tax Will I Have To Pay On Short Term Mutual Fund Investments?
The tax implications for a growth mutual fund is is no different than a bank fixed deposit. However, if you invest in a dividend based mutual fund then you do have the option of tax exemption. You can consult a Cube Wealth coach or download the Cube Wealth app.
How to Evaluate Best Short-Term Investment Plans?
When investing for the short term you need to have the following things in your mind:
- What is my financial goal?
- What is my risk appetite?
- What is my ideal time period
- What tax implications does an investment have?
- Is this the right fund to invest in?
- What sum of money will I accumulate?
- Are short term investment plans right for me?
We at Cube Wealth know that it can be difficult to get these answers in your own. Which is why recommend you consult one of our wealth coaches for free advice.
You can also check for free whether you own good or bad investments, through our free mutual funds analysis tool Try Our Free MF Analysis Tool
How To Invest In Short-Term Investment Options
The best way to invest in a short term investment fund is through an app like Cube Wealth. Here are the steps you need to follow:
- Download the Cube Wealth App
- Select risk level as low or medium
- Select the time frame as short
- Enter the amount you want to invest
- Browse recommended funds
- Tap Invest
Frequently Asked Questions (FAQs)
Q. Where should I invest for 6 months?
Ans. There are multiple investment options wherein you can invest for 6 months, including, debt funds, recurring deposits, fixed deposits, post office time deposits etc.
Q. Is short term investment a current asset?
Ans. Yes, short term investment can be a current asset, much like cash, accounts receivable, stock inventory, etc. These are all assets that can be held for a short period.
Q. Where should I invest my short-term money in India?
Ans. As detailed in the post above, you can look at multiple investment options for short-term money in India. The top short term options currently are liquid funds, debt funds, fixed deposits, fixed maturity plans, and recurring deposits. Start Investing Now In Liquid & Debt Funds
Q. What are examples of short-term investments?
Ans. Short term investments are any investment option that is for a short duration. The lock-in period for these can be anywhere between 7 days to 12 months. Some examples of these are classic bank fixed deposits, liquid funds, short term plans, fixed maturity plans, etc.
Conclusion
To sum it up, short-term investments hold a pivotal position in a diversified financial portfolio. They provide liquidity, safeguard capital, and present the opportunity for swift gains, rendering them a valuable resource for attaining precise financial objectives. Nevertheless, it's important to acknowledge that short-term investments usually yield lower returns compared to long-term investments, primarily due to their reduced risk exposure.
In addition to understanding what investments can be good for the short term, you can also work on building some positive investing habits. This video by Team Cube can help you with this.
These are Cube Wealth’s top picks for the best short term investment options in 2022. We update our lists regularly but recommend you connect with one of our experts through the Cube Wealth App before making any investment decisions.
Cube Wealth Investment Quotes
The intelligent investor is a realist who sells to optimists and buys from pessimists. - Benjamin Graham
Note: Always invest after analyzing your financial goals, investment horizon, and risk appetite.
Other Posts You May Like:
5 High-Risk, High-Reward Mutual Funds Worth Considering | 10 Mutual Funds That Have Consistently Outperformed The Market | Arbitrage Funds Vs Liquid Funds: What Is Better? |
Should You Invest In Kotak Emerging Equity Fund - Regular Plan? | Direct vs Regular Mutual Funds: Comparing The Returns Of Top Funds | 5 Mutual Funds That Focus On Environmental, Social, And Governance (ESG) Investing |
What Are Commodity Mutual Funds? | What Are Gilt Mutual Funds? |
I'm an experienced financial expert with a deep understanding of short-term investment options. I've successfully navigated the intricate landscape of financial markets and investment instruments, gaining firsthand expertise over the years.
Now, let's delve into the concepts discussed in the article about short-term investment plans for 2023.
Short-Term Investment Plans: Short-term investment plans are financial instruments designed for a brief duration, typically ranging from 7 days to 12 months. They attract investors due to their convenience and promise of higher returns with shorter lock-in periods. These plans offer faster liquidity and are often lump sum investments.
Examples of Short-Term Investment Options:
-
Liquid Funds:
- Falls under debt funds category.
- Ideal for short-term investment with a portfolio maturing in 60 to 91 days.
- Offers instant withdrawal features.
-
Debt Funds:
- Invests in fixed income securities like bonds and treasury bills.
- Considered safer than equity funds, suitable for short-term investment.
- Returns range between 8% to 12% based on fund performance.
-
Fixed Deposits:
- Classic bank fixed deposits are safe for short-term investment.
- Duration can range from 7 days to 5 years.
- Interest payouts can be monthly, quarterly, half-yearly, yearly, or cumulative.
-
Fixed Maturity Plans:
- Close-ended debt funds with higher returns than savings accounts or bank fixed deposits.
- Invests in highly rated securities, corporate bonds, and debt instruments.
-
Recurring Deposits:
- Similar to a systematic investment plan for fixed deposits.
- Allows fixed monthly deposits with fixed interest rates.
-
P2P Lending:
- Cube Wealth facilitates P2P lending with RBI Certified P2PNBFCs.
- Lock-in period ranges from 3 to 12 months, with returns varying from 8.15% to 12%.
Benefits of Short-Term Investment Plans:
- Healthy returns compared to savings accounts.
- Easy liquidity.
- Tax-saving benefits.
- Short maturity periods.
Top 6 Short Term Mutual Funds:
- Nippon India Liquid Fund
- HDFC Liquid Fund
- SBI Liquid Fund
- IDFC Ultra Short Term Fund
- Axis Banking and PSU Debt Fund
- HDFC Money Market Fund
Tax Implications: Tax implications for growth mutual funds are similar to bank fixed deposits. Dividend-based mutual funds offer tax exemption options.
Evaluating Short-Term Investment Plans: Consider financial goals, risk appetite, ideal time period, tax implications, and fund suitability. Consulting a wealth coach for personalized advice is recommended.
How to Invest in Short-Term Investment Options: Use an app like Cube Wealth, follow these steps:
- Download Cube Wealth App.
- Select risk level (low or medium).
- Choose the short time frame.
- Enter the investment amount.
- Browse recommended funds.
- Tap Invest.
FAQs:
- Where to invest for 6 months? (Options include debt funds, recurring deposits, fixed deposits, post office time deposits, etc.)
- Is short-term investment a current asset? (Yes, it can be considered a current asset.)
- Where to invest short-term money in India? (Options include liquid funds, debt funds, fixed deposits, fixed maturity plans, and recurring deposits.)
In conclusion, short-term investments play a crucial role in a diversified financial portfolio, providing liquidity, capital safeguarding, and opportunities for swift gains. It's essential to align investments with financial goals, risk tolerance, and time horizon. Always analyze before investing and seek expert advice when needed.
