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8 Best Short Term Investment Options
A short term investment is something that you would want to invest for a short duration. Well, here short term doesn’t have any fix duration, but it’s ideally a financial goal, which is less than three years. So, if you are planning to invest for a short term, here are some of the best short term investment options.
One can park this fund in short term investment options, so that it can be liquidated anytime one chooses while earning a return reward too. While Investing money for a vacation, start early to create a large corpus and focus on low risk, assured Return on Investment and high liquidity instruments.
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1. Liquid Funds
Liquid Funds invest in short-term money Market products such as treasury bills, commercial papers, term deposits, etc. Liquid funds invest in securities that have a low maturity period, usually less than 91 days. Liquid funds provide easy liquidity and are less volatile than the other types of debt instruments. Also, these are a better option than traditional Bank Savings Account. In comparison to bank account, liquid funds provide 7-8 percent of annual interest.
Investors wanting to invest in liquid funds, can choose amongst the below-mentioned Best Liquid Funds:
Fund NAV Net Assets (Cr) 1 MO (%) 3 MO (%) 6 MO (%) 1 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Indiabulls Liquid Fund Growth ₹2,424.53
↑ 0.46 ₹516 0.6 1.8 3.6 7.4 6.8 7.12% 1M 29D 1M 16D Principal Cash Management Fund Growth ₹2,212.93
↑ 0.44 ₹6,783 0.6 1.7 3.5 7.3 7 7.06% 1M 10D 1M 10D PGIM India Insta Cash Fund Growth ₹326.414
↑ 0.06 ₹555 0.6 1.8 3.5 7.3 7 7.06% 1M 3D 1M 6D JM Liquid Fund Growth ₹68.471
↑ 0.01 ₹3,240 0.6 1.7 3.5 7.3 7 7.05% 1M 13D 1M 16D Axis Liquid Fund Growth ₹2,791.37
↑ 0.57 ₹34,316 0.6 1.8 3.5 7.4 7.1 7.19% 1M 29D 1M 29D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 29 Nov 24
2. Ultra Short Term Funds
Ultra short duration funds invest in fixed Income instruments which have a Macaulay duration between three to six months. Ultra short-term funds help investors avoid interest rate risks and also offer better returns compared to liquid Debt fund. Macaulay duration measures how long it will take the scheme to recoup the investment
Here are some of the best performing ultra short term funds to invest:
Fund NAV Net Assets (Cr) 1 MO (%) 3 MO (%) 6 MO (%) 1 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Savings Fund Growth ₹523.751
↑ 0.12 ₹15,098 0.6 1.9 3.8 7.7 7.2 7.78% 5M 19D 7M 24D UTI Ultra Short Term Fund Growth ₹4,067.46
↑ 0.72 ₹3,046 0.6 1.8 3.5 7.2 6.7 7.63% 4M 27D 5M 7D BOI AXA Ultra Short Duration Fund Growth ₹3,036.95
↑ 0.41 ₹174 0.5 1.7 3.3 6.6 6.2 7.26% 5M 12D 5M 12D Indiabulls Ultra Short Term Fund Growth ₹2,021.64
↑ 0.84 ₹18 0.2 0.8 1.5 4.2 3.23% 1D 1D ICICI Prudential Ultra Short Term Fund Growth ₹26.5234
↑ 0.01 ₹14,206 0.6 1.8 3.6 7.4 6.9 7.53% 5M 1D 5M 16D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 29 Nov 24
3. Low Duration Funds
The scheme will invest in debt and money market securities with a Macaulay duration between six to 12 months. Low duration funds have a higher maturity duration than liquid and Ultra Short Term fund. Risk-averse investors can invest in this scheme for a short period and earn better returns than that bank savings account. These funds generally offer steady and stable returns.
Here are some of the best low duration funds to invest:
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity PGIM India Low Duration Fund Growth ₹26.0337
↑ 0.01 ₹104 1.5 3.3 6.3 4.5 7.34% 6M 11D 7M 17D Baroda Pioneer Treasury Advantage Fund Growth ₹1,600.39
↑ 0.30 ₹28 0.7 1.2 3.7 -9.5 4.07% 7M 17D 8M 1D ICICI Prudential Savings Fund Growth ₹519.198
↑ 0.12 ₹21,132 1.9 3.9 8 6.5 7.6 7.68% 9M 29D 1Y 9M 7D UTI Treasury Advantage Fund Growth ₹3,387.84
↑ 0.87 ₹3,394 2 3.9 7.7 6.3 7.1 7.56% 10M 17D 1Y 4D Tata Treasury Advantage Fund Growth ₹3,758.75
↑ 1.04 ₹2,588 1.8 3.7 7.4 6 6.9 7.42% 9M 22D 11M 5D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 29 Sep 23
4. Money Market Fund
The money market fund invests in many markets such as commercial/treasury bills, commercial papers, Certificate of Deposit and other instruments specified by the Reserve Bank of India (RBI). These investments are a good option for risk-averse investors who want to earn good returns in short duration. This debt scheme will invest in money market instruments having a maturity up to one year.
Here are some of the best Money market funds to invest:
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Aditya Birla Sun Life Money Manager Fund Growth ₹353.696
↑ 0.06 ₹26,348 1.9 3.7 7.8 6.6 7.4 7.55% 5M 8D 5M 8D ICICI Prudential Money Market Fund Growth ₹362.65
↑ 0.08 ₹27,974 1.9 3.7 7.7 6.5 7.4 7.38% 4M 10D 4M 21D UTI Money Market Fund Growth ₹2,946.23
↑ 0.60 ₹16,113 1.9 3.8 7.7 6.6 7.4 7.43% 5M 5D 5M 5D Kotak Money Market Scheme Growth ₹4,292.81
↑ 0.92 ₹29,488 1.9 3.7 7.7 6.5 7.3 7.4% 4M 24D 4M 24D L&T Money Market Fund Growth ₹25.2486
↑ 0.00 ₹2,227 1.8 3.7 7.5 6 6.9 7.34% 4M 27D 5M 7D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 29 Nov 24
5. Short Term Funds/Short Duration Funds
Short duration funds mainly invest in Commercial Papers, Certificate of Deposits, Money Market Instruments, etc, with a Macaulay duration of one to three years. They may provide a higher level of return than ultra-short-term and liquid funds but will be exposed to higher risks.
Here are some of the best money market funds to invest:
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity PGIM India Short Maturity Fund Growth ₹39.3202
↓ 0.00 ₹28 1.2 3.1 6.1 4.2 7.18% 1Y 7M 28D 1Y 11M 1D Nippon India Short Term Fund Growth ₹50.127
↑ 0.06 ₹7,665 1.9 4.1 8.2 5.9 6.8 7.57% 2Y 10M 2D 3Y 8M 1D Aditya Birla Sun Life Short Term Opportunities Fund Growth ₹45.2633
↑ 0.05 ₹8,924 1.9 4.1 8.1 6.2 6.9 7.67% 2Y 9M 7D 3Y 9M 4D UTI Short Term Income Fund Growth ₹30.2226
↑ 0.03 ₹2,676 2 4 8.1 6.1 6.9 7.56% 2Y 9M 3Y 5M 23D ICICI Prudential Short Term Fund Growth ₹57.2612
↑ 0.05 ₹19,922 1.9 4.1 8 6.5 7.4 7.76% 2Y 3M 4D 3Y 11M 26D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 29 Sep 23
6. Bank Fixed Deposits
Bank fixed deposits can be one of the best short term investment options, as these are secure investments. Also, many banks provide better interest rates on FDs, which typically Range from 3% to 9.25% per annum. Investors can park their money for a minimum period of 7 days to a maximum of 10 years.
A similar option to Bank FD is Recurring deposit, which is equally effective for short term investment. If you have a habit of saving monthly, then Bank Recurring Deposits are a good option to go. They have a minimum of six months to a maximum of a decade’s tenure. Their interest rates are around 8% per annum.
7. Savings Account
A savings account is the most popular short term investment option in India. Also, it’s the safest and easiest way to access your money. If you invest your money in savings account, you can get around 4% to 7% of the return. However, interest rates may vary bank to bank. One can deposit and withdraw their money as per their convenience and requirements.
8. Fixed Maturity Plans
Fixed Maturity Plan (FMP) is offered by Mutual Funds, which invest in money market and debt instruments. These funds come up with lock-in period varying from a month up to three years. Unlike FDs, you cannot withdraw your money in FMPs before the maturity period. However, FMPs are more tax efficient than FDs, and you can also expect better returns.
Conclusion
Every investor has their own choice of instruments with regards to their goals. In order to invest in the short term Investment plan, one should calculate the amount, risks, tenure, interest rates and liquidity that comes along with each instrument. Since you are planning a short term investment, you should make a smart choice with instruments that have a low risk. Invest Now and make your short term goals successful!
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