Short Term Investment
The short term investment is a low-risk alternative for investing one’s saved up capital. With such investments, one can avoid the hassle of having to lock in their money for a long tenure. When choosing for a short term, investment alternatives should be considered based on factors such as tenure and liquidity. Options such as Fixed Deposits are lucrative as they guarantee returns and offer the investor with reasonable flexibility. Savings account, liquid funds, recurring deposits, National Savings Certificate, and Fixed Deposit are some risk-free short term investment opportunities in India. Read more to know about these saving instruments to discover the best alternative for you and your savings:
· Savings Account:
One of the most popular choices, immense liquidity is offered by a Savings Account, which allows the investor to withdraw funds whenever he/she wants. However, due to the 4% interest rate, a Savings Account may not be the best alternative unless 24/7 access to funds is essential.
· Fixed Deposits:
For short term investment, a fixed deposit is one of the best alternatives. Providing a high return rate, they are unaffected by market volatility and offer sufficient flexibility. Moreover, you can withdraw the deposit in case of an emergency by simply paying the penalty. Additionally, interest on fixed deposits is taxable only after earnings are more than Rs. 10,000. With bonus features such as a fixed deposit calculator, one can even calculate their returns with FD calculator monthly interest and accordingly plan out investments.
· Recurring Deposits:
If one wishes to avoid investing a large amount at once, a recurring deposit is a way to go. It is primarily a point to be considered if one is wondering about the FD vs. RD dilemma. These Recurring Deposits provide the flexibility of monthly investment, and they can be opened at the nearest bank and even post office! The tenure ranges from six months to a decade. It must be remembered that the earned interest is taxable.
· National Savings Certificate:
With a tenure of half a decade, this investment alternative has a hassle-free application procedure – all that is needed is a visit to the post office! Another merit of the National Saving Certificate is that Section 80C of Income Tax Act allows for tax deductions. However, the earned interest is taxable.
· Liquid Funds:
Liquid funds are a subdivision of mutual funds where your money is invested in short term certificates and securities. The investor has the freedom to withdraw their amount from these funds whenever they want. However, it is not advised to do this without caution as regaining access can take up to three days. These funds allow for a favourable rate of fd interest rates of up to 7%. One can expect a relatively increased amount for a guarantee for investment. It is because the money that goes into these funds is put into money market schemes.
The best short term investment option for you is the one that suits your needs the best. It is for this reason that one must know about all the available alternatives so that the right choice can be made.