Short term investments can be a great way to get high returns with low risk. With the right investment option, you can make sure that your money is safe and secure while also making some gains in the short run.
Peer to peer investing, Fixed Deposits (FDs), short term debt funds, bank deposits and Arbitrage Funds are some of the most popular options for those looking to invest for short term gains. Each of these investment options come with their own set of advantages and disadvantages so it is important to do your research before deciding which one is best for you.
1. Bank savings accounts:
It’s a no-brainer to have a savings or checking account. It is as liquid as liquid can be, and you can access these funds quickly. Of course, the interest rate on these funds is only approximately 4%, but a few institutions provide greater rates of up to 5-6%. If liquidity and safety are your key concerns, this is an excellent investment option.
2. Fixed Deposits at a Bank:
A typical bank FD with a one-year maturity time will pay 6-7% in interest. Some bank FDs have a one-year lock-in period; however, investors can open FDs for periods ranging from one to ten years, making them suitable for both long-term and short-term investments. An important advantage of an FD is that it can also be used to obtain a loan.
3. Short-Term Debt Funding:
These debt mutual funds invest in debt securities with maturities ranging from six months to one year. They are intended for very short-term debt investors. A debt fund will generate higher yields and be less taxed than a bank FD. Of course, there is some risk if interest rates rise, but with such short residual maturities, the risk is modest. They are expected to beat banks and money market funds in terms of return.
4. Gold ETFs:
Gold ETFs are more of a hedge instrument than a short-term investment vehicle. Gold ETFs, on the other hand, tend to keep their value for a shorter amount of time. These funds can also outperform in times of market volatility and geopolitical instability. Because they are listed on exchanges, they are very liquid and can be realised in two days. The gold ETF’s value is affected by the price of gold.
5. Term Deposits at the Post Office:
A one-year POTD is available at any post office near you. These are fully secured and guaranteed1 by the Government of India, just like bank FDs. They have a one-year lock-in period, but in an emergency, you can always pledge these deposits to boost them to 75% of the value of POTD. POTD is taxed in the same way that bank FDs are.
6. Equity Mutual Funds:
Equity mutual funds can be held for fewer than five years A longer time horizon is prudent, given the volatility of financial markets. Even if equity funds permit withdrawals after only 12 months of investing, your capital may suffer as a result of an early withdrawal.
The most efficient way to invest in equity funds is through a systematic investment plan (SIP). You invest a predetermined amount on a regular basis. SIP enables you to have a lower average unit cost than the market. As a result, your units will be more profitable.
Source: ACE MF, PersonalFN Research
7. Peer to Peer investing:
Peer to peer investing has become an increasingly popular form of short-term investing, with investors able to earn up to 18% return per annum. This type of investment involves lending money directly to businesses or individuals and receiving interest payments in return. By bypassing the traditional banking system, peer to peer investors can avoid fees and charges while also earning a higher rate of return on their investments. With the right research and due diligence, peer to peer investing can be a great way for investors to diversify their portfolios and earn higher returns than more traditional investments.
Final words
If you are looking to invest for short-term gains, there are various options available. Investing in peer-to-peer lending, fixed deposits, bank deposits and arbitrage funds can be a great way to make quick returns. These investments offer high returns with low risk and can be great for those who want to get short-term gains.
Peer to peer investing is becoming increasingly popular as it offers higher returns than traditional investments such as FDs or bank deposits. Arbitrage funds also offer good returns with low risk while short term debt funds can be a good option if you are looking for high liquidity and low volatility.
No matter what investment option you choose, it is important to do your research and ensure that you make the right decision for your needs. With the right strategy in place, you can easily get short term gains from these investment options.
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