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What are the Best Short-Term Investment Plans with High Returns?

Financial products known as short-term investments can be quickly converted into cash. While some short-term investments have a longer lifespan, many are sold or converted to cash in just 3 to 12 months.

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Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

Money is a valuable commodity in our lives; hence, all of us are focused on maximizing our financial growth. The best way to achieve this is to invest in savings plans that offer sufficient returns. This allows you to save your money and, at the same time, earn interest and good returns for you. However, there is no quick way to earn huge interest and returns without taking risks.

Money is a valuable commodity in our lives; hence, all of us are focused on maximizing our financial growth. The best way to achieve this is to invest in savings plans that offer sufficient returns. This allows you to save your money and, at the same time, earn interest and good returns for you. However, there is no quick way to earn huge interest and returns without taking risks.

If you are among those who believe in possessing liquidity, you must look for short-term investment options with high returns. This investment allows you to save money and earn good interest, helping you meet your short-term financial goal. However, the main challenge is picking the best investment options in India for the short term that fits your financial needs.

If you start looking for short-term investment plans with high returns in India, multiple options can be confusing. Each finance company will offer a product to lure you. But it is up to you to decide what is right and wrong. The only problem with short investment plans with high returns is that they may have high-risk avenues depending on the return and interest.

To better understand the short-term investment options with high returns, this article will discuss short-term investment plans and briefly take a look at some of the best investment options in India for the short term.

The goal of short-term investment plans with high returns is to generate large profits in a relatively brief period, which can be as little as a year or a few months. These plans put more emphasis on covering the anticipated short-term expenses.

Most often, investors who favour short investment plans aren’t very interested in waiting years to see their money multiply several times over. They want rapid and efficient outcomes instead. In this circumstance, short-term investment plans can preserve them.

Short-term investments with high returns are made to fulfil a near-future need or desire. For example, you want to buy a smartphone as soon as it launches, and at the same time, you know that you need to create savings for that. Such situations are when short investment plans are helpful. But what are short-term investment plans? How to select the best short-term investment options?

There are two classifications of investment options in India.

1. Short-term investment

2. Long-term investment

Thus investment plans that offer maturity in the short term, say 6-months, 1-year, or 2-year tenors, are called short-term investment plans.

All of your short-term goals may be divided into two factors:

1.The duration of the goal

2.The importance of the goal

Goals that are 4-12 months away can be extremely short. Then there are short-term saving plans that last 1-3 years. Objectives that are one week to three months away, for example, can be segmented as emergency goals.

After categorising your goals as emergencies, ultra-short-term, and short-term, add a layer of priority to each. Goals such as an emergency fund, school fees, debt payments, and so forth are critical. A vacation or an expensive phone, on the other hand, can and should wait.

This distinction between time and importance can be useful when preparing for short-term goals. As a general rule, the closer you are to your goals, and the more important those goals are, the greater your allocation should be to those instruments that will not catch you off guard.

Money set aside for goals such as an emergency fund should be invested or held in low-risk securities.

Best short-term investment options in India

Best short-term investment options in India

Here are some of the best short term investment plans with high returns options with high returns in India that you may opt for

1. Unit-Linked Insurance Plans (ULIPs)

ULIP is a type of financial instrument that offers two of the essential financial requirements most expected by investors and policyholders: investment and insurance. In addition, such plans offer flexibility and numerous benefits, like allowing one to choose from a range of funds based on their financial situation and goals.

2. Fixed Deposits (FDs)

Using a fixed deposit, you can easily create a corpus for a short-term goal. Most banks and some NBFCs also offer FDs with a reasonable interest rate. However, reading the rules and regulations is advised before putting the money into fixed deposits.

3. Recurring deposits (RDs)

It is one of the most common best investment options in India for short term. Investors use it to save money for short-term needs. The most significant feature of RDs is that they are highly secure and are offered in almost all banks.

4. Debt Mutual Funds

An investor can primarily invest money in debt instruments like government bonds, commercial papers, treasury bills, and corporate bonds through these mutual funds. This is one of the best short investment plans that one can opt for in India.

5. Treasury Securities

Another excellent option for short-term investments that offer great liquidity, security, and gratifying returns is treasury securities or treasury bills. Their maturation periods range from 91 to 365 days.

6. Corporate or Company Deposits

The last minor investment plan on our list is a corporate deposit, often known as an NCD. You can choose a secured NCD (Non-convertible Debentures) through this scheme to secure your capital. Additionally, it provides enticing interest rates that range from 9% to 12%.

7. Stock Market

People with strong market knowledge and a high tolerance for risk can consider investing in shares, commodities, and derivatives. Depending on the investor’s financial goals, a short-term or long-term investment can be made in this.

8. Bank savings account

Short-term investment choices that are very accessible include savings or checking accounts. They are easily accessible, and you can get your hands on the money. Although the interest rate on these is just about 2-6%, this is still a great investment if liquidity and security are your top priorities.

9. Short-Term Debt Funding

These mutual funds for debt securities invest in debt instruments with remaining maturities between six months and one year. They are intended for investors in very short-term debt. Compared to a bank FD, a debt fund will yield higher returns and be less taxed. Even if the risk is minimal given the short residual maturities, there remains still risk if interest rates rise. In terms of return, they are thought to outperform banks and money market funds.

10. Mutual Funds for Arbitrage

Equities and futures are combined to create the equivalent of a debt instrument by arbitrage funds. To lock in the price difference, the fund manager will buy stocks and sell futures contracts. With an 8–9% price difference, it is comparable to a fixed-return instrument. Arbitrage funds’ enticing trait of being taxed similarly to equity funds may become much less advantageous now that LTCG on equity funds is subject to a 10% tax.

Other popular short term investment options with high returns

1.SIP in Equity Mutual Funds

2.Stock Market

3.Savings Account

4. National Savings Certificate (NSC)

Though multiple options in the financial market can seem daunting, the bright side is that they open doors, giving a spectrum of offerings suitable for each investor.

Conclusion

Short-term investing is the best strategy to meet your financial goals in the near future. You can secure financial independence that will help you manage unforeseen expenses with the best investment options in India for short term. Additionally, it allows you to withdraw money whenever you need to without having to wait a long time.

Furthermore, short investment plans offer consistency, liquidity, and minimal transaction costs, which demonstrates ways to prevent undesired situations greatly. You can therefore expect to see significant profits in a short period of time.

Key takeaways

    Best Short-Term Investment Plans with High Returns

  • Unit-Linked Insurance Plans (ULIPs)
  • Fixed deposits
  • Recurring deposits
  • Debt mutual funds
  • Treasury securities
  • Corporate or company deposits
  • Stock market
  • Bank savings account
  • Short-term debt funding
  • Mutual funds for arbitrage

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

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- A Consumer Education Initiative series by Kotak Life