Top short term investment plans in India you should know about

The majority of us focus a lot on saving all through our lives. No matter how much money we earn every month, we try to save some out of it. However, if you want to make your wealth grow, you should also invest and not just save your money. Many people find the idea of investing a bit risky as they think the money they are putting in a plan may not give them the expected return as it depends much on the market risks. Well, for these kinds of people, short-term investment plans are the best.

Short-term investment plans

There are mostly two types of investments in India, long-term and short-term. The short-term investments are made for lesser tenure which can be one or two years. Many lucrative short-term investment plans will give you a high return. The investments that are made for more than five years are classified as long-term investment plans. If you are new in investments, you can first opt for short-term investments and once the amount is matured, you can go for long-term investments.

Some of the top short-term investment plans in 2021

There are many short-term investment plans available in the market that you can opt for. Here are some of them mentioned below:

Recurring Deposits (RD)

Getting an RD is one of the most common short-term investment options that many people opt for. RD is offered by many banks and it allows you to earn fixed interest on the amount that you invest, till the time of its maturity. To open an RD, you do not even need to step out of your home. You can just log into your net banking account or mobile banking app, and choose the amount that you intend to save every month and mention your preferred tenure. The duration of an RD can be from 6 months to 10 years. The rate of return is between 4% and 5% per annum. The interest earned from the RD is taxed as per your tax slab after adding your income.

Fixed Deposits (FD)

FD is offered by all the banks and is a very popular way of seeing growth in your hard-earned money. You can invest the amount for a particular period that may range in between 7 years and 10 years, for a fixed rate of return. After the tenure is over, the amount is matured automatically, and you can withdraw the money. The interest rate is higher than RD but you can only withdraw the money after the date of maturity. The rate of return is between 2.5% and 5.5% per annum, and the duration is between 7 days and 10 years.

Corporate Deposits (CD)

It is similar to FDs but what makes it different is that the deposits are collected by the corporates and used for their operations and expansion. The interest rates are a bit higher than the FDs, and so is the risk of default.  It is best for people who are capable of taking moderate risks. This option gives a better return than FDs. The rate of return is between 6% and 8% per annum. The duration is between 1 year and 3 years.

Debt Mutual Funds

Under debt mutual funds, the money is invested into debt instruments like treasury bills, government bodies, corporate bonds, commercial papers, and many more. This is the kind of short-term investment option which is perfect for people who hesitate in taking risks but expect good short-term returns. The rate of return that you can get under this option is between 8% and 11% per annum, and the duration is between 6 months and 3 years. The debt mutual funds are calculated once you redeem the units within three years. The long-term capital gains are imposed if you keep it for more than three years on your income.

These are just some of the short-term plans that can give you an idea of what you can expect a return. If you want to know more about the short-term investment plans and the options available in the market, you can visit the website of IIFL today. You can come across a list of such short-term plans and decide on going for your preferred one. On the same website, you can also find term insurance plans that you can compare and consider buying.