Short-term investment plans are those that can be easily liquidated, meaning they can easily be converted into cash. The time period for a short-term investment plan generally ranges from one day to up to five years.
Simply put, short-term investment plans are low-risk ones and involve trustworthy financial institutions and instruments such as fixed deposits, national saving certificates and large-cap mutual funds. When you are not interested in a lengthy investment horizon, a short-term plan is your best bet, as it can fetch optimum returns.
Short-term investment plans are plans that are invested only for a short period of time, typically between one day to five years. Given the brief investment time horizon of small term investment plans, it is crucial to invest with trustworthy and reliable financial institutions.
These investment options for short term are ideal for those looking to utilise funds immediately. Despite the need to use funds in the immediate future, you may still want to generate handsome returns.
So, rather than keeping funds idle, you can look out for short term investment plans to maximise your earnings.
Short term investments are invested in relatively safe financial securities that guarantee safety of capital while generating assured returns. Investors choose short term investment plans when they have fund requirements in the immediate future and also want to generate handsome returns.
You can also use short term investment plans to plan out your short term financial goals such as buying a new phone, planning vacations, arranging weddings, etc. A short term investment plan is highly preferred by investors looking to park their funds in risk free, securitised investment options that generate assured returns.
This becomes especially important during such times when inflation is rising rapidly while the bank’s savings rate hovers around the 2-3% mark. A short term investment plan is a lifesaver when you can’t let inflation affect your money but cannot take risks with your capital as well.
These types of investments are often held with the government or with highly trustworthy and reliable corporations. Some of the best short term investment options include FDs, RDs, Treasury Bills, government or corporate bonds and National Saving Certificate.
Given the number of short term investment options available in the market, here’s a quick glimpse of some of the best plans to help you make the right investment.
Short Term Investment Options |
Tenor |
Rate of Return (p.a.) |
Ideal for |
Savings Account |
N/A |
2.7-6% |
High liquidity levels |
Bank and NBFC Fixed Deposits |
7 days to 10 years |
3-8% |
Conservative investors |
Treasury Securities |
91 days to 365 days |
The difference between the issue price and face value |
Conservative investors |
National Saving Certificate |
5 years |
7% |
Conservative investors |
Corporate Deposits |
6 months to 5 years |
6.25% to 8.13% |
Risk-averse investors seeking assured and decent return |
Recurring Deposits |
3 months to 10 years |
5.35-7.25% |
Conservative investors |
Post Office Time Deposits |
5 years |
7% |
Conservative investors |
Large-cap Mutual Funds |
3 to 5 years |
Historically 10% to 12%, market-linked |
Investors seeking higher rates of returns |
Debt Instruments |
3 to 12 months |
7% to 8% |
Conservative investors |
Disclaimer: These interest rates have been updates as of January 2023 and are subject to change.
Understand that investments are heavily dependent on your personal circumstances and financial goals. However, consider factors such as safety of funds, liquidity and tax benefits before making any investment decisions.
Now that you have explored some of the most popular short term investment plans and their key benefits, choose those schemes that align with your goals.
You may invest in any of the following plans:
Liquid funds
Short-term corporate bonds
Government bonds
Certificates of Deposit
Money market accounts
Yes, whether you invest for a month or a year, short term plans are assets.
Minimal duration
Easy liquidity
Better transparency
High flexibility
When you are looking to utilise funds immediately but also want to generate profits rather than parking them as idle cash, such short-term plans are ideal.