Short Term Investment Plans draw a lot of investors, due to their convenience and ease. If you’re wondering where to invest money for a short period and get maximum returns, this blog is for you.
While it is ideal to consult a Cube Wealth Advisor before taking any investment decisions, in this piece we’ll take a closer look at the best short term investment option for 2020!
What Are Short Term Investment Plans?
Any investment option that is for a short duration can be classified as a short-term investment option. The lock-in period for these can be anywhere between 7 days to 12 months.
These short term plans come with the lure of higher returns and shorter lock-in periods. That means, unlike long term investments that require more patience and discipline – short term investment options are easier to commit to.
These offer faster liquidity and are mostly lump sum investments. The risk level on short term plans and funds should be carefully assessed as high-returns often come with higher-risk or lock-in periods. However, most short-term investment plans offer healthy returns and lower risks since the maturity period is shorter.
Examples of Short Term Investment Options
Classic Bank Fixed Deposits are safe for short term investment seekers. These can range anywhere between 7 days to 5 years depending on how you define short-term but the ideal duration is at least 3 years. You invest a fixed lump sum and then choose to renew the fixed deposit at maturity or withdraw the funds.
However, you should know that many banks do not let you withdraw fixed deposits prematurely.
Therefore you must be careful while investing if liquidity is a key driver for you.
Interest payouts for an FD can be monthly, quarterly, half-yearly, yearly or cumulative. You can earn around 6.5 percent per annum for an FD of 12 months or more. Though some banks may offer up to 7.60% to senior citizens. Interest earned is taxable and TDS is cut for interests of over Rs.10,000.
Fixed Maturity Plans
A recurring deposit is almost like a systematic investment plan for a fixed deposit. It offers investors the option to deposit a fixed amount each month and earn a fixed interest on it.
However, compared to an FD it will earn slightly less as you are not doing a lump sum investment. Interest rates are similar to fixed deposits and range from 5% to 7% depending on the bank.
Why Invest in Short Term Mutual Investments?
What Tax Will I Have to Pay on Short Term Mutual Fund Investments?
Best Short Term Investment Options
We’ve picked the best short term investment options for you on the basis of multiple factors listed below:
AMC comfort – Pedigree, Credibility, Compliance, Process and Ability to Retain Top Management & Talent
Fund Manager comfort – Experience, Reputation, Performance and Continuity Record (We have had 170+ investment and marketing team interactions in the last 1 year)
Scheme Aesthetics – Fund Size & Recent AUM Growth, Concentration Analysis, Clarity of positioning
Performance – Historical performances (SIP, Last 20-Quarters, 3-Year, and 5-Year Numbers), Risk-adjusted returns, Sharpe, Beta, and Other Statistical Ratios
Negative Criteria – Cash Calls, Outlier Performances, Recent Management Changes, etc.
Given below is a list of some of the best short term investment mutual funds that we recommend. Please contact a Cube Wealth Advisor for a free consultation call.
Best Short Term Mutual Funds
|Top 6 Short Term Mutual Funds|
|Axis Strategic Bond|
|ICICI Pru All Seasons Bond|
|IDFC Bank & PSU Debt|
How to Evaluate Best Short Term Investment Plans?
When investing for the short term you need to have the following things in your mind:
What is my financial goal?
What is my risk appetite?
What is my ideal time period?
What tax implications does an investment have?
Is this the right fund to invest in?
What sum of money will I accumulate?
Are short term investment plans right for me?
We at Cube Wealth know that it can be difficult to get these answers in your own. Which is why recommend you consult one of our wealth coaches for free advice.
How to Invest in Short Term Investment Options?
The best way to invest in a short term investment fund is through an app like Cube Wealth. Here are the steps you need to follow:
Download the Cube Wealth App
Select risk level as low or medium
Select the time frame as short
Enter the amount you want to invest
Browse recommended funds
For further assistance with documentation or if you have any questions, please EMAIL A CUBE WEALTH ADVISOR.