In today’s India of smart investors and strategic money management, the options to invest your hard earned money are many. Broadly classified, these plans fall into the categories of long term plans and short term plans. While the former focuses on tying up your money for a longer tenure while indulging in systematic and periodic investments or premiums that is aimed at generating a surplus corpus of funds for a later date, the latter is tuned to invest your money for shorter durations with the promise of considerable returns. Short term investment plans solve immediate financial obligations, can be initiated with a smaller investment, allows high liquidity of funds, involves minimal risk owing to the shorter time durations and the outputs are comparatively high. Not surprisingly, these investment plans are finding great favor with the modern Indian investor.
In India, the following five short term investment options have always been highly preferred- but now, they are enjoying a revival of sorts through the financial year that has been, 2014-15.
Savings Bank Account (SB) – The humble SB accounts have been our classical and obvious choice when it comes to an organized way of saving money, or getting initiated to the world of banking. This option is risk free, easily available and offers high and immediate liquidity. The returns might not be substantial, but the security offered alongside simple add-on features like the ATM card and cheque books, make SB accounts a universal favorite when it comes to short term investment.
Fixed Deposits (FD) – Fixed deposits are one of the most preferred instruments in a bank’s arsenal- proving to be a short term as well as a long term investment option. With a minimum tenure of 30 days, to a maximum duration of 10 years, the FD can be utilized as a secure lock for your money that can be broken in times of acute financial crisis. While this assures liquidity, for best results, let the FD run to full maturity before you withdraw the funds alongside the applicable interest.
Mutual Funds- Especially ‘Debt Instruments’ and ‘Large Cap Mutual Funds’. The former is a low risk option that produces good results without the fear of market instability and other financial factors. At nearly 10.5%, the returns will appeal to any short term investor. Meanwhile, Large Cap Mutual Funds are a bit high risk, wherein mutual fund companies invest your money in the stocks of large businesses that could potentially help the business perform better, ergo solid returns through a 1-3 years tenure for you.
Gold and Silver- Down the ages, no other commodity has experienced more application in bartering, business, economy and politics than gold and silver. Today, the rapidly incrementing prices of these precious metals make them an ideal source of investment that can purchased, stocked for long durations and then sold in line with the prevailing market conditions. The returns are generally very favorable, that includes minimal risk of investing directly in the unsteady market.
Stock Market- Products such as shares, commodities and derivatives are finding great favor with the young Indians of today. This form of investment demands good market knowledge and an affinity for high financial risk. However, with the right mix of luck and patience- a substantial sum of money stands to be made.
Short Term Investments are the ideal outlet for a first-time investor, or an investor who may have many unforeseen financial obligations, or is skeptical about investing loads of money for the far future without enjoying it sufficiently today. Whatever the reasons may be, the growing interest in these investment options is bound to grow many folds, while inspiring banks and other financial institutions to create more products that follow this philosophy. Happy short term saving everyone!!
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