Bajaj Finance Best Investment Plans

Best Short-Term Investment Options In India for 2021

Best Short-Term Investment Options In India for 2021

7 Best short-term investment plans in India for 2021

When planning for the financial future, long-term goals take precedence over short-term goals, leaving most individuals without any financial plans for funding short-term goals. Investing for short-term goals can help you meet your immediate requirements and fund unforeseen expenses requiring urgent financing.

For a balanced investment portfolio, you must choose a mix of short-term and long-term investment options that can cover for your future and immediate goals. You could also consider re-investing your short-term investment gains, which can help contribute towards your future. Short-term investments can be made for shorter tenors of 1-year or more. There are several lucrative 1-year investment plans that can help you make some quick returns.

DID YOU KNOW? You can get 0.10% extra returns on investing in Bajaj Finance online FD, and senior citizens can get additional rate benefits of 0.25%. Invest Now

5 Best Short Term Investment Options in India


The best short term investment options available in India are:

  1. Fixed Deposit
  2. Ultra-Short-term Funds
  3. Liquid Funds
  4. Recurring Deposits
  5. Short-Term Debt Mutual Funds
  6. Fixed Maturity Plan
  7. Floating Rate Mutual Funds

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

  • Fixed Deposit

    One of the best available 1-year investment plans, fixed deposits offer stable returns. Choosing a trustworthy financing company for investment in fixed deposits also provides certain additional benefits, like high stability and credibility, an online application process, online FD Calculator, and higher interest rates for senior citizens, employees or existing customers. For example, some financial institutions offer special rates of interest for senior citizens and company employees.
  • Ultra-Short-term Funds

    These mutual fund schemes can be quite similar to liquid funds. Ultra short-term funds can invest in securities that mature in a week or up to 18 months. It is important to remember that such funds can be quite different from each other, making it difficult to keep track of them. The returns on these funds can be higher than liquid fund earnings over a 9-month period.
  • Liquid Funds

    These are mutual fund schemes that invest in short-term securities, like government securities. They offer returns similar to bank deposits, but are not as liquid. However, they can be a bit more tax efficient. You can definitely expect better returns than those from a savings bank account. However, investing in liquid funds can be quite complicated, and may require in-depth topical knowledge.
  • Recurring Deposits

    If you are unable to invest a lump sum amount of money, and would rather invest on a monthly or quarterly basis, you can go for a recurring deposit. It can be opened for a fixed period of time, and deposits may be made at fixed, pre-determined intervals that can be monthly or quarterly. The minimum tenor for a bank recurring fixed deposit is 6 months, and contributions towards these deposits can be low, but on a recurring basis.
  • Short-Term Debt Mutual Funds

    These funds invest in short-term government securities, corporate securities, and money market instruments. If you are willing to take some risk, short-term debt mutual funds is an ideal option to invest in, for any time period ranging between 3 months to 1 year.
  • Fixed Maturity Plan

    It is a close-ended debt mutual fund that invests only in instruments whose duration is similar to its own term. This means that it aligns its term with that of its underlying assets. For example, a 365-day fixed maturity plan would invest in instruments that mature in 365-days or slightly before that. They are the mutual fund industry’s replica of fixed deposits, with a few marked differences.

    While fixed deposits offer fixed returns, those on fixed maturity plans are indicative in nature, which means that there is a possibility that the actual returns may deviate from those indicated at the time of investment.
  • Floating Rate Mutual Funds

    These are debt mutual funds that invest approximately 75% to 100% in securities that pay a floating rate interest, like bank loans and bonds, while the remaining percentage is invested in fixed income securities. Short-term floating rate mutual fund plans up to 1 year normally lean towards short-term maturities with higher liquidity. They have delivered an exceptional performance in recent years, which is particularly impressive because of their low volatility high liquidity. They are ideal for when interest rates are set to rise, or when you wish to establish an emergency fund.

    When investing for your immediate future, it is important to invest in instruments that provide returns in a shorter duration. Often market-linked instruments offer lucrative returns over the long term, whereas fixed-income instruments provide assured returns. Thus, when investing in short-term investment instruments, it is best to choose instruments like fixed deposit that offer attractive returns.

If you’re looking for a 1-year investment plan with great returns and negligible risk, Bajaj Finance offers FD with an interest rate of 5.65% for individuals below 60 years of age. These FD rates can go up to 5.75% for online FD customers, and up to 5.90% for senior citizens.

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