Investment is the key to all your small and big goals!
Goals are dreams with a deadline. Your financial objectives can be separated into two categories: short-term objectives and long-term objectives.
Simply earning money is insufficient for achieving both short-term and long-term goals. You must also plan and make proper short and long term investments so that your money works as hard for you as you do for it.
Before investing, it is critical to create a roadmap for your goals so that you can successfully invest in both short term investment plans and long term investment plan possibilities to meet your financial objectives.
What Is Short Term Investment?
Any investment choice with a time horizon of fewer than five years is termed a short term investment plan. Short-term objectives are established to achieve inescapable events that will occur shortly. For example, if your child is presently 16 years old, he or she will require money for graduation in two years.
Buying your child a motorcycle when he graduates or a fancy automobile for your family three years down the road are both short-term aspirations that necessitate a short term investment plan.
Some of them may be postponed, while others cannot. To attain particular goals shortly, you must avoid risk and be deliberate in your actions.
What Is Long Term Investment?
Long term investment plans are those that are kept for a year or longer. Long term investment plans often provide higher returns when kept for a longer length of time. They are often intended to meet future demands like college fees for your child, post-retirement aspirations, and other such things.
Mr Shakti, for example, intends to purchase a property in Mumbai after ten years with a 30 per cent down payment. As a result, he begins putting $10,000 per month in a large-cap mutual fund through a monthly SIP.
Best Short Term Investment Plans in India
Short term investment plans are focused on meeting short-term financial goals and producing significant returns in 1 to 3 years. Here are the top short term investment opportunities for you to consider:
1. Savings accounts
Having a savings account is one of the simplest and safest methods to access your money. The primary motivation here is liquidity rather than profit. Banks provide a return on savings accounts of no more than 4% to 7%.
2. Liquid Funds
These are mutual funds that invest in short-term government certificates and bank deposits. Because these investments are safe, you can enter and exit at any moment. Try to avoid putting your emergency cash in them, as the redemption process takes around 2 days.
3. Short term funds
Short-term funds invest in assets with maturities of one to three years. These funds are a little riskier than ultra-short-term and liquid funds since the maturity of the securities is longer. Taxation is applied in the same manner as any other debt fund.
4. Recurring deposits (RDs)
This is a sort of secured investment that is suited for people who like to invest monthly rather than in a big payment. You can utilise either Postal RD or Bank RD; in general, banks give RD for a minimum of 6 months and a maximum of 10 years.
5. Post-Office Time Deposits
Post-Office Time Deposits (POTD) are a type of short term investment plan developed by India Post. This concept is very popular in India’s rural and remote locations. POTD has a one-year, two-year, three-year, and five-year term. A Post Office Time Deposit is comparable to a bank FD in many ways.
Best Long Term Investment Plans in India
Depending on the type of objective, time frame, and risk tolerance, one can select any of the best long term investment plans listed above and begin saving. Let’s take a closer look at each investment plan and its features: –
1. Bank Fixed Deposit (FD)
When there were few choices, this was the most traditional kind of investing in India. Bank fixed deposits are regarded as the safest, as the money may be deposited for longer periods, such as three, five, or even 10 years, for a fixed rate of return ranging from 3% to 6.5 per cent each year.
2. Post Office Savings Schemes
Postal offices, like banks, provide numerous savings programmes that are favoured by many people nowadays owing to the security and higher interest rates. The post office Savings account, post office monthly income scheme account, 5-year senior citizen savings plan, National savings certificate, Kisan Vikas Patra, Sukanya Samriddhi Yojana, and other well-known post office savings programmes are listed below.
3. Public Provident Fund (PPF)
This is comparable to the Employee Provident Fund (EPF) offered to paid employees, but the sole distinction is that anybody can register a PPF account. PPF investments can be kept for up to 15 years, with the current rate of return set by the government each year at 7.1 per cent.
4. National Savings Certificates (NSC)
It is yet another safe long term investment plan option offered in India through the post office and a few public sector banks. The investment period is five years, and one may begin saving in NSC with as little as 100, giving it an inexpensive choice for persons in the unorganised sector to begin saving.
5. Corporate Fixed Deposits
Corporates collect these deposits to fund growth and operating operations. Though it is comparable to bank FDs, the risk is higher when compared to other options, but the interest rates are somewhat higher. They provide annual interest rates ranging from 6% to 8%.
Wrapping It Up
Investors are constantly on the lookout for investment opportunities where they may park their money until they need it. The normal savings bank account is their go-to option. However, investors have a plethora of other short term investment plans.
Our wants and desires are never-ending because we want to live a pleasant life. To live a comfortable lifestyle, you need to engage in short and long term investment plans on a regular and conscientious basis to reach your financial objectives and develop money for yourself and your loved ones.
Long term investment plans and short term investment plans serve two distinct functions. Long-term investments are more profitable over time.
These plans are perfect if you want to save for long-term goals like your child’s school or wedding, the purchase of a home, retirement, and so on. Short term investment plans, on the other hand, can be utilised to achieve short- or medium-term objectives such as purchasing a car, travelling, or paying off debts.