While everyone need to be planning for long term investment, sometimes you may have money for short term investments. While bank FD’s can be one of the good short term Investment Options, you may need to look beyond it. Which are the Best Short Term Investment Options available in 2017 for investors? Which are the Top 9 Short-Term investment Options, where an investor can get highest returns? In this article, I would try to explore some of the top short term investment plans which can fetch you good returns for a tenure of 3 months to 3 years.
There are many other banks like Yes Bank, Kotak Mahindra Bank which provide interest rate of 6% per annum on their Savings Bank Account.
Even RBL Bank provides 5.1% interest rates and Lakshmi Vilas Bank provides 5% interest rates.
These are good for low risk appetite investors who are willing to invest for 3 months to 1 year period.
2) Invest in Liquid Mutual Funds – 4% to 8% per annum returns
Liquid mutual fund invests in short term debt instruments which can be liquidated quickly, hence carry less returns compared to any other mutual funds. However these are great funds if you want to park your money for short term or 1 month to 6 months. You can get returns ranging 4% to 8% per annum through these liquid mutual funds. Some of the best liquid mutual funds are ICICI Pru Liquid Fund, India Bulls Liquid Fund, JM High liquidity fund, L&T Liquid Fund etc.
3) Short Term Debt Mutual Funds
One of the best ways to invest money for short term is to invest in short term debt mutual funds. Short Term Funds invests in short term government securities, corporate securities and money market instruments. These can provide 5% to 8% returns though not guaranteed. Birla SL Treasury Optimizer Fund, HDFC Midterm opportunities, Birla SL Short Term Fund etc. are some of the best funds. These debt funds are good for investors who can take some risk (as such funds invests in bonds, there could be some downside) and willing to invest in 3 months to 1 year period.
4) Invest in Bank FD’s offering highest interest
These days, banks are reducing interest rates on the bank FDs. Considering investing in Bank FD’s which are offering highest interest rates.
Bandhan Bank is offering 8% interest rates per annum for 1 year FD.
Repco Bank is offering 8% interest rates per annum for 1-2 years FD scheme.
Banks like RBL Banks are offering 7.65% to 7.75% for 1-2 years FD scheme.
5) Invest in FMPs (Fixed Maturity Plans)
Fixed Maturity Plans in Mutual funds invest in short term to medium term securities and have maturity of 1-3 years. These FMPs would be issued by mutual fund companies almost every month. Low risk investors looking for 7% to 9% returns per annum can invest in these funds. However one should note that we cannot redeem before the maturity period unless these are tradeable on stock exchanges.
6) Post Office Term Deposit
If you do not want to invest in stock market or stock market related instruments like mutual funds and are a low risk investor, you can invest in post office term deposits. The returns are around 7% to 7.5% per annum. This is one of the best short term investment options for those who do not want to take any risk.
7) Invest in Secured NCDs
Non Convertible Debentures are bonds issued by the companies for their working capital requirement. There are secured and unsecured NCD’s. Investors can invest in secured NCDs as they provide security to their principal by way of receivables, stocks etc. Investors who want to take some risk can invest in these secured NCD’s. These NCDs would be issued by companies on regular basis and carry interest rate between 8% to 9.5% per annum.
8) Invest in company FDs offering high interest
There are several companies which offer fixed deposits for their working capital requirement. These companies willing to issue fixed deposits instead of taking bank loans as such loans carry high interest. Company Fixed Deposits interest rates vary between 7% to 8.5%. These are issued for 1 to 5 years tenure. Medium to high risk investors can invest in these company FD’s for 1-3 years. Investing in 4-5 years FD could be risky as we do not know how the performance would be there in medium term of 4-5 years.
Shriram Transport Finance FD scheme offer 8.25% interest rates.
An arbitrage fund is a mutual fund which rides on the mispricing between the cash markets or spot markets on the one hand and derivatives or futures markets on the other. These funds are tailor-made for risk-averse investors and are a safe option to park money when there is a persistent wobble in the market. SBI Guilt Short Term Plan, ICICI Pru Gilt Fund etc., has provided over 10% returns in last 1 year. Low risk investors can invest in these funds to get high returns.
Conclusion: Top 9 short term investments indicated above may not be suitable for all investors. They would depend upon the risk appetite and period of investment. Smart investors can invest these plans to get high returns on their short term investments.
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Suresh KP: Suresh KP is the Founder of Myinvestmentideas. He is NISM Certified - Investment Adviser. He has been analyzing financial markets in the last 20 years. He can be reached at email@example.com