Different Types of Short-term Investments

A short term investment is basically an investment that is done for a period of one year or below. When it comes to investing their money for a short period of time, investors must keep a couple of points at the back of their minds. For instance, investors should be able to withdraw their short term deposits as and when needed, the capital amount should be safe and their deposit should offer higher returns. Here, find out more about different types of small term investments.

Short-term FD:

The short term FD or fixed deposits can be opened for a minimum period of seven days or even for a couple of months, depending upon the investor’s goals or requirements. At the end of the tenure, investors receive their capital amount along with added interest.

Short-term MFs:

The short term MFs or Mutual Funds are a great option for people who want to open a deposit for a couple of months. Investors manage these funds for the purpose of safeguarding their capital amount and incurring modest gain. These funds are also excellent from the tax saving point of view.

Liquid funds:

Liquid funds are ideal for investors who want to keep their money intact for one or more than one day i.e. up to ninety days or more. Liquid funds rarely witness a drop in its NAV (Net Asset Value). Depending upon their requirements, investors can either pick the dividend or the growth option.

FMP or Fixed maturity plans:

The Fixed Maturing Plans mature after a period of one year and offer returns as high as 9.5%. However, the only problem with this type of investment is that they cannot be liquidated quickly. They are maintained for a period of ninety days and hence cannot be closed before time. Also, the Fixed Maturity Plans are basically close ended funds, which means they consist of high-end bonds and government securities.

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