Most investors want to grow their money over time, but cash depreciates quickly due to inflation. As a result, it’s vital to invest your money in a way that allows it to grow in value and contribute to your long-term financial success.
Investing is a way of letting your hard-earned money help you with some of the tough lifts. This sounds great on paper, but investing implies some risk, and investors must decide if the risk vs. potential fd returns trade-off is worth it.
Don’t rule out all your possibilities just yet if the idea of losing the money you put into your investment makes you uneasy (you’re not alone). The good news is that you may utilize a variety of tactics to decrease the amount of risk you take on while investing – here are some investment plans in India.
Investment Plans in India 2021
1. Recurring Deposit
Because it is the most common short-term investment option and is offered by all banks, many individuals utilize it to save their money for the short term. It allows you to earn a set interest rate on your investment until it matures. To open a recurring deposit (RD) account, just log into your net banking account. Simply enter the amount you want to save each month and the length of time you want to save for, and you’re done!
- Every year, the return on investment ranges from 4% to 6%.
- Duration: 6 months to 10 years
- The interest on your RD account is taxed according to your tax bracket when it is applied to your income.
2. Fixed Deposit
Another popular way to build a corpus for short-term investments is to employ a bank’s fixed deposit. The funds are invested for a predetermined period, generally, 7 to 10 years, at a predetermined rate of return, after which they mature and can be withdrawn. Early withdrawal is not feasible, despite the higher fixed deposit interest rates than savings accounts and RDs. You can also choose a set deposit for 6 months or more, depending on your needs.
- The yearly rate of return is between 2.5 and 5.5 percent.
- Duration: 7 days to 10 years
- Your FD returns interest is added to your income and taxed following your tax rate.
3. Corporate FD
Corporate fixed deposits are similar to bank fixed deposits, except they are collected by businesses for expansion and operations. Interest rates are somewhat higher than bank FDs since the risk of default is higher. Those prepared to take a chance can invest in corporate FDs and earn larger fd returns.
- Every year, a return on investment of 6% to 8% is expected.
- Duration: 1 to 3 years
- Fixed deposit Interest rates are added to your earnings and taxed at the current marginal rate.
4. Debt Mutual Funds
Government bonds, treasury bills, commercial papers, corporate bonds, and other money market instruments are a big part of what these mutual funds invest in. This is one of the best short-term investment options for risk-averse individuals seeking better short-term profits.
- Every year returns on investment range from 8% to 11%.
- Duration: 6 months to 3 years
- Short-term mutual funds are taxed if the units are redeemed within three years, while long-term capital gains are taxed if the units are held for more than three years.
5. Savings Account
Savings accounts are one of the most popular short-term investment alternatives in India. It’s a bank or financial institution’s savings or checking account where you may save money and earn interest. It provides optimum liquidity because customers may withdraw their monies at any moment. Furthermore, there are no deposit limitations, and many banks provide accounts with no balance.
- Return on investment ranges from 3.5 to 7%, depending on the bank.
- Indefinite time limit
- Because interest on a savings account is considered an additional source of income, it is taxed.
6. The Stock Exchange
Stock markets are suitable short-term investments for high-risk investors seeking to maximize their profits. You may double your money by investing in the right stocks for a few months if you can choose the right ones. You face the danger of losing your entire investment if you gamble on the wrong stocks.
- Every year, the rate of return ranges from 10% to 100%.
- Timeframe: from one month to five years
- Returns are added to your earnings, and tax is calculated based on your earnings.
Short-term investments are the most efficient strategy to attain your financial goals in the short run. Short-term investments can help you handle unanticipated expenditures and ensure financial freedom. It also allows you to withdraw funds whenever you need them without having to wait a lengthy time.
Furthermore, short-term investment plans in India provide consistency, liquidity, and low transaction costs, allowing you to produce large returns in a short period while also exhibiting strategies to avoid unwanted complications. Fixed deposits are the most popular investment choice, and we may choose from a variety of possibilities, such as a 6-month fixed deposit. In India, you can choose from a variety of long-term investment programs based on your future goals.
The list above should have given you an idea of the many short-term investment options accessible in India in 2021. Best of luck with your ventures!