5 best short-term investment schemes

When looking at the suitable investment options, you must choose your investment options based on your liquidity requirements, tenor and risk appetite. Safe investment options like fixed deposits are good short-term investment options that provide you with flexibility and safety of deposit to earn assured returns.

5 best short-term investment options in India

If you’re looking for secure ways to invest your money for steady, risk-free growth, the following options are ideal for you.

The best short-term investment options available in India are the following

1. Savings account
2. Liquid funds
3. Recurring deposits
4. National Savings Certificate
5. Fixed deposits

Read along to know more about these savings schemes and find out which is the best option to grow your savings.

1. Savings account

As one of the preferred choices of most people, savings accounts offer maximum liquidity. This helps you withdraw funds anytime and anywhere without any hassles. However, with an interest rate hovering around 4%, a savings account is not the best investment vehicle unless you constantly need access to all your funds.

Additional Read: Fixed Deposit Vs. Savings Account

2. Fixed deposits

Fixed deposits are easily among the best options for short-term investments. They offer a high rate of return, independence from market fluctuations and interest rate volatility, and 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 is taxable after your earnings cross Rs. 10,000.

The safety of capital and surety of returns has increased the popularity of fixed deposits as investments. Enjoy additional features like fixed deposit calculator that help you calculate returns and plan your investments accordingly. You can opt for a hassle-free online fixed deposit application with some of the leading financiers. You can check fixed deposit rates in India first before making a decision.

3. Recurring deposits

These deposits can be opted for if you do not want to invest a lump sum amount in one go. Recurring deposits offer you the flexibility to invest money monthly. Opening a recurring deposit account at your nearest financial institution or even at the post office is possible. 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.

Additional Read: Difference between fixed deposit and recurring deposit

4. National Savings Certificate (NSC)

This investment option has a tenor of 5 years. Then, 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. But, again, the interest earned is taxable.

5. Liquid funds

Liquid funds are a type of mutual fund that invest your money in short-term government certificates or securities. An investor can withdraw money from these funds at any time. However, it is not prudent to allocate your emergency funds into this option, because gaining complete access to your cash back takes around 2 or 3 days.

Liquid funds offer you a higher interest rate of up to 7%. Moreover, since the money in these funds is invested in money market instruments, you can expect a comparatively higher amount of security for your investment.