Short Term Investment Plans in India
Any investment scheme that has a time period of 1 to 5 years is distinctive of a short term investment. There are quite a few advantages in opting for short term investment plans as compared to their long term equivalents. If an investment plan is a short term one, the risks are less and the money is not kept locked up by the bank or any other financial institution. The return on the investment (ROI) is also quite sizeable. Here is a brief on some of the best short term investment plans.
Fixed Deposits:
Without a doubt, FDs are the most secure short term investment plans available. This scheme provides a fixed rate of interest that ranges from 4 to 11% yearly. Though the money cannot be withdrawn before its maturity period, fixed deposits come with a period/tenure of 10 days to 10 years. Interest is paid 3 months after the initiation of the deposit and is exempt from tax deduction under Section 80C of the Income Tax Act, 1961. Untimely withdrawals may involve a penalty, but that is decided upon by the bank.
Savings Account:
A Savings Account is another reliable and secure mode of short term investment, which can be primarily used for liquidity. An account like this can be opened with any bank or financial institution and money can be kept till required. Banks pay around 4 to 7% interest rate, depending on the amount and duration for which the money is reserved in the account.
Gold Investment:
Investment in gold is deemed to be one of the wisest options when it comes to investing for a short duration. This very in-demand yellow metal can come handy in uncertain times as it offers protection and stability during banking crisis, inflation or social unrest. Another benefit of investing in gold is that any inclination in the financial market does not have any effect on the value of the metal. With the demand for the precious metal on a constant increase (especially in a country like India), there has been a 23.5% return on investment in the past few years.
Liquid Funds:
Liquid funds are ones that have a high liquidity value that can be invested in a certificate of deposit or short term securities offered by the Indian Government. These funds are essentially short term Investment Plans that have a Low Risk and low return investment while offering a fixed current income. In order to avoid fluctuating interest risks, the maturity of this fund is 90 days.
Long Term Investment Options in India
Long-term investments are investment schemes that have a term period of over 5 years. They play a vital role in the larger scheme of things, wherein you might need accrued amounts; for example, in your child’s education or to buy a land/property. It is, therefore, imperative to have a solid know-how of the kind of investment options that you are opting for.
The most common Long Term Investment Options are -
Employee Provident Fund/Public Provident Fund:
Provident or pension fund is a savings scheme that is provided by every employer to every employee in which a small portion of the employee’s monthly income is deducted and diverted into his/her Provident Fund. This amount can only be withdrawn by an employee upon leaving the organization or upon retirement from it.
National Savings Certificate:
Offered by the Post Offices in India, it is one of the traditional investment implements that is exceedingly favoured by senior citizens and those who are looking to invest smaller amounts for longer lock-in tenures. You can invest from Rs 100/- to 1.2 Lakhs with a 6-year maturity term. The annual interest rate on NSC’s is 8% and not subject to market fluctuations. Also, the interest is not tax-free at the time of payment at maturity.
Real Estate:
Investment in real estate (land and property) is a very smart investment alternative as the appreciation in the value of real estate has been exceedingly encouraging and almost always on the rise in the recent past. As an investment option, it represents good growth and is also a substantial asset to have for something to pass on to the next generation.
