Choice of 6 short-term investment options


Financial investments are a top priority for those concerned about an uncertain future. Money is a necessary evil to comfortably live your life during your lifetime. To maintain a good lifestyle for your family members, a dignified lifestyle and aspirations, you need to plan for your financial future.

Fear of the uncertainty of the future prompts you to put your hard earned money in financial portfolios, which gives you good returns on your investment for the future.

Short-term investment opportunities

Financial investments are classified as long-term investments and short-term investments. A short-term investment involves placing your silver, gold, silver, or stocks in an investment portfolio for a period of less than 3 to 5 years.

Short term investments are preferred because they are considered liquid investments and can be cashed out quickly without any problems.

Invest your money in short-term investments or plans may not make a lot of money, but you can be assured of moderate returns, taking less risk and planning wisely.

You may be planning short term investments for the near future like: –

  • Admission of your adult children to a renowned engineering, medical and management school in 2 years. You need a hefty amount of money for college education and hostel expenses, which are sky-high these days.
  • You have to buy a motorbike for your son, to go to college, or a scooter for your daughter.
  • Your spouse may be interested in buying a dream home in 3 years, which requires careful financial planning, including down payments and IMEs.
  • You have an eye on buying a luxury SUV costing 15 Lakhs in the next 6 months.
  • You have planned a family vacation abroad next year requiring a considerable amount of money.
  • You may have sold your old home and plan to buy a home in a posh community within a year. The money you received from the sale of the house should be invested in a short-term financial plan with a profit.

Keeping your unused money in any savings account is not a wise move due to the current rate of inflation which is reducing the value of money day by day.

To invest your money, four parameters must be evaluated very carefully. The duration of your investment, liquidity, returns and income tax applicable to your investments.

You have to decide on the term, i.e. how long you want to keep your funds in that particular plan. When do you want to redeem your funds, it’s liquidity. You need to be careful in your investment so that you don’t have to pay a penalty for withdrawing your funds. The interest rate on your investment portfolio will need to be confirmed so that you can be assured of the return on your planned investments.

6 short-term investment options

People who invest for a short period are concerned about the safety of the invested capital and the return on investment. There are different options to choose from which can be categorized as Fixed Income Return and the other being Market Linked Return on Investment.

Short-term investments give less return on your investments than long-term investments, but they are safe and produce modest returns.

  1. Savings account

The savings account in banks and post offices is the preferred choice for the low and middle income class in India. Banks and post offices are easily accessible and plentiful to meet your investment needs.

People who do not want to take risks and who do not know financial products and want to invest small amounts of money, engage in savings account investments in banks or post offices also present in the villages.

The ease of operation, the security of their funds, the ease of liquidity charms the masses although the interest rates can vary from 4 to 6% per year. This type of investment gives returns which are among the lowest in the investment portfolio. If you earn interest over Rs 10,000 / -, you have to pay income tax.

  1. Fixed deposits in banks

Fixed deposits are financial instruments highly valued by the Indian masses served by public and private banks. Fixed deposits in banks are popular because they are safe and have variable investment options for a specific week, fortnight, month, or days that differ from bank to bank.

Deposits can be automatically renewed if desired, with minimal effort at the bank. In the event of bank default, each fixed deposit holder is insured for Rs 1 Lakh by the Indian Deposit Insurance and Credit Guarantee Company.

Since the duration of the investment is agreed between the client and the bank, withdrawing funds before the scheduled repayment date may result in a penalty. Please read the prospectus, check all the pros and cons of recurring deposits in the public sector, the private sector before investing.

The interest rate is determined by the Reserve Bank of India, by their repo rate. Yields on fixed deposits are currently around 6% per annum for one year and up. Benefits for seniors were provided by the banks by granting a supplement of 0.5% on top of the normal interest rates.

Income tax is payable if interest accumulates over Rs 10,000 per month including other investments made. Normally, tax is withheld at source if Form 15 G or 15 H is not submitted to the bank.

  1. Offer fixed deposits to the general public

Unlike banks, your investments in these plans may not be secure. These companies offer higher interest rates than banks, thus attracting clients who want to increase their investments in a short time.

Normally, the term of fixed deposits is one year or more. If the company is performing poorly and is unable to repay you the promised interest with your principal, the company’s assets are foreclosed to pay you back.

This is a long process and your funds may be blocked for a long time. If you want to withdraw your investment before the scheduled repayment date, you may have to pay a severe penalty. Please read the prospectus carefully before investing in these get-rich-quick schemes.

Evaluations of their performance can be exalted, read reviews of financial companies. Progress carefully before investing. Currently, the interest rate is around 7.5% per annum, which is more than that of banks. Income tax is levied if your annual interest is over Rs 10,000.

  1. Fixed deposit-Sweep-In

This is another version of fixed deposits in banks. Normally, your funds in your savings account are subject to a minimum interest rate of 4-6%.

The fixed deposit sweep facility is given by some banks, which allows the investor to decide the minimum amount to keep in their savings bank, and the rest of the money is automatically transferred to a fixed deposit.

Whenever you need money, your fixed deposit amount is transferred to you for liquidity purposes. The interest rate for the fixed deposit amount is higher than the savings account rates. Most banks allow a period of one year.

The interest rate ranges from 4 to 6.5%, as you are advantaged by a mix of savings bank interest rates and fixed deposits. It is a safe option to bet on as you are assured of higher returns without any risk.

  1. Recurring deposits

A very popular financial instrument for accumulating wealth through systematic monthly investment is the recurring deposit system.

If you expect a cumulative deposit in 6, 9 or 12 month term and are willing to pay a set amount each month. Recurring deposit is an option to make your dreams come true by saving money over a period of time and securing higher interest rates than savings account rates.

Recurring deposits can be operated for 6 months to 10 years, although the mandate may differ from bank to bank. There are penal provisions in the event of premature withdrawal. If you withdraw your funds within a month, no interest is paid on top of the principal amount.

The interest rate for recurring deposits is similar to that for fixed deposits. The interest rate is currently around 6.5%. Income tax will be deducted if the interest accrued on all your investments exceeds Rs 10,000.

  1. Time deposit at the post office

Post offices are present in every nook and cranny of the country, which has won the hearts of thousands of people with their services for a very long time. Their presence in remote places is an asset to people.

Post offices, besides delivering mail, have embarked on financial services such as small savings account plans, the insurance industry, money transfer services to a multitude of places.

The post office term deposit can be invested for 1, 2, 3 and 5 years and the repayment is annual. A minimum bar of 6 months is applied in the event of premature withdrawal. If you want to pay off your investment before the scheduled period, you will get a reduced interest amount.


The money market is still volatile and of great concern to investors. The money put up in short-term investments is normally smaller and gives safe but moderate returns. Although long-term investments are more likely to attract more interest, the low-income group and middle class enjoy great interest through short-term investment options.

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