Laymen like us get puzzled when it comes to short term investment. Where should I invest? How much to invest? What amount of risk is involved? Hundreds of question comes to your mind and here we will try to show you some short term investment plans to multiply your asset involving minimum risk.
Main reason behind your hesitation to invest is you fear that you might not have the money in your hand when you need it the most. If it is so, then short term investment plans are perfect to opt for. With a wise and timely implemented short term investment plan, you not just build decent fund for your future but also save tax on it.
Any investor coming to invest on short term plans have two primary objects – safety of the capital and good return from this capital. Now have a look at some of the best known short term investments.
It is the safest and secure way to access your fund anytime you want. By opening a saving account you can keep your money in it which in turn will earn you decent interest minus any risk. There is as such no locking period for saving deposits. You can’t expect very high return from such investment as main purpose of saving account is liquidity not high earning. Rate of interest varies from 4% to 7% per annum. Under Section 80TTA of IT Act, any individual can claim tax deduction of up to Rs.10000 on interest earned from such deposits.
Bank Fixed Deposit:
Large part of Indian citizens likes to invest in bank fixed deposit schemes. This could be a prolific option to have an effective tax saving investments strategy. Unlike saving account, fixed deposits have a specific locking period and it ranges from 30 days to 10 years. You can withdraw the money before maturity but this will surely minimize your profit.
Liquid funds are special type of mutual funds. In general, they invest in short term government securities and deposit certificates. Therefore it ensures security of your investment along with good return. It offers complete flexibility to exit the funds at any point of time. If you hold the fund for more than 3 years, your earning will be taxed at 20% with indexation benefit.
Gold or Silver:
We Indians have always been lured by the sheen of the Gold and Silver. These two precious metals can be a vital part of your investment plan. You can invest on them with intention of short term or long term investment. It also gives huge return as Gold price is rising each and every day.
These are attractive investment options particularly for people who want to avoid market risk. Debt instruments do not get affected by market volatility and thus secures safety of your money and earns steep return for you.
Fixed Maturity Plans(FMPs):
These are actually type of debt funds and come with minimum locking period of 3 years. If you know exactly when you need the money then only you should invest in such funds. It is more or less like FDs but much better in terms of tax saving investment and return.
5 Years National Saving Certificate(NSC):
Postal NSC Scheme is yet another safe and secure way to invest. If you expect a good return and you are ready to wait for 5 years then NSC is an intelligent choice. You can also count this investment option as one of the best practiced tax saving investment option as it offers tax rebate under Section 80C of IT Act.
There are lot more options available in the market but here our emphasis was on investment options involving security and return of capital while bypassing the risk factor. First evaluate your financial responsibilities and then invest accordingly.