Best Short Term Investment Plans for Beginners

Author: Jessy Jose

There’s never a bad time to invest your money. You may be in your twenties or thirties, forties or even fifties; it’s never too late or early to invest your money. But if patience is not your forte and you’re looking for some quick returns, then you can invest in short-term investment plans.

Any investment option which is less than 5 years is considered as a short-term investment. Short term goals are set to achieve unavoidable things that are going to occur in the near future. For e.g. your kid is currently 16 years of age and after 2 years he/she will need cash for graduation. Buying a new car or invest in property in a few years’ time, these are all short term goals that require short term investments. Few of them you can postpone and few of them you can’t. To achieve definite goals in the near future, you must not take any risk and be specific about your decisions.

Even though life insurance policy plans are said to be the best investment, they are not really the best for short term investment. But there are some types of life insurance like ULIPs that do provide returns at regular intervals that can supplement your income and provide you with more disposable income to meet some short term goals. But most life insurance products make sense for long-term investment and there are separate options for investments when it comes to short-term investment goals.

Here are some options if you want to put your money in short term investment:

  1. Savings account: A savings account will give you 4% to 7% return on your savings account. It is the easiest and safest way to invest your money.
  2. Liquid funds: These are mutual funds that invest in short-term government certificates and security deposits. With these mutual funds, you can enter and exit at any given time as these investments are secure. Liquid funds invest in money market investments like call money among others. It is rare for liquid funds to see a dip in their net asset values (NAV).
  3. Recurring deposits: RDs are suitable for those who don’t want to invest in lump sum and rather invest on a monthly basis. Banks offer recurring deposits for a minimum of 6 months to a maximum of 10 years.
  4. National Saving Certificate: An NSC is a bond that matures after five years. You can claim tax deduction under Section 80C of Income Tax Act if you invest in NSCs.