Top 5 Short-Term Investment Options to Grow Your Wealth Quickly | Maximizing Your Return
If you are among those who believe in possessing liquidity, you must look for short-term investment options with high returns. This investment allows you to save money and earn good interest, helping you meet your short-term financial goal. However, the main challenge is picking the best investment options in India for the short term that fits your financial needs.If you start looking for short-term investment plans with high returns in India, multiple options can be confusing. So to better understand the short-term investment options with high returns, this article delight discuss Top 5 Short-Term Investment Options to Grow Your Wealth Quickly.
What is short term investment?
Any investment option which is less than 5 years is considered as a short term investment. Short term goals are set to achieve unavoidable things that are going to occur in the near future. Investors with short-term money have two primary objectives
Safety of capital
Return on capital
The typical investment tenure for best short term investment plans is less than 12 months.
One of the main advantages of short-term investments is that they tend to be less risky than long-term investments. Because the investment horizon is shorter, there is less time for things to go wrong, and investors are more likely to be able to quickly liquidate their holdings if necessary.However, short-term investments also tend to offer lower returns than long-term investments, since they are designed to be held for a shorter period of time. Additionally, some short-term investments, like stocks, can be more volatile than others, which can increase the risk of losing money.
Top 5 Short-Term Investment Options to Grow Your Wealth Quickly | Maximizing Your Return
Liquid Funds | Top 5 Short-Term Investment Options to Grow Your Wealth Quickly
These are kind of mutual funds that invest in short term government certificates and securities of deposits. You can enter and exit at any given time as these investments are secure. Try restricting throwing in your emergency funds in these, as the redemption takes around 2 days. One can expect around 4%-7% post tax return on liquid fund investment.
Investors can opt for the dividend option or the growth option. Dividend is taxed at nearly 30%. Capital gains are added to income and taxed at marginal income tax rate(rate of taxation). From a taxation point of view investors in the lower tax brackets are better off opting for the growth option. While investors in the highest tax bracket can choose either option.
Short term funds | Top 5 Short-Term Investment Options to Grow Your Wealth Quickly
Short term funds invest in securities that mature in 1-3 years. These funds are a little risky as the maturity of securities are more than ultra-short term and liquid funds.
Banks offer deposits of varying time frames beginning with a minimum of 7 days. So an investor looking to park money for even a week can choose a fixed deposit with a matching tenure.
While liquid funds are suitable for investment tenures of a few days, short-term mutual funds are ideal for tenures running into a few months.
The interest on the deposit is added to income and taxed at the marginal rate of income.
High-yield savings accounts
A high-yield savings account works well for risk-averse investors. Especially for those who need money in the short term and want to avoid the risk that they won’t get their money back. A high-yield savings account at a bank or credit union is a good alternative to holding cash in a checking account. As, the bank pays interest on a regular basis. Savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC) at banks and by the National Credit Union Administration (NCUA) at credit unions, so you on’t lose money.
Corporate Bonds
Corporate bonds are bonds issued by major corporations to fund their investments. They are typically considered safe and pay interest at regular intervals, mostly quarterly or twice a year. A short-term corporate bond fund is highly liquid. Also it can be bought and sold on any day that the financial markets are open. You can purchase them at virtually any online broker that offers ETF and mutual funds.
In addition, corporate bonds fund provides the least amount of risk exposure to changing interest rates, so rising or falling rates won’t affect the price of the fund too much.
Certificates of Deposit (CDs)
CDs typically offer higher interest rates than savings accounts. But your money will be locked in until the CD matures. CDs are insured by the FDIC, so you won’t lose any money on them. The risks are limited for a short-term CD, but one risk is that you may miss out on a better rate elsewhere while your money is tied up in the CD. You can find CDs at your bank, and they’ll generally offer a higher return than you could find in other bank products such as savings accounts and money market accounts
Final Takeaway | Top 5 Short-Term Investment Options to Grow Your Wealth Quickly
Short-Term investments can be a good choice for investors who are looking for a way to earn some extra cash quickly without taking on too much risk. However, it’s important to carefully consider the potential risks and rewards of any investment before making a decision. By choosing the right short-term investment options, you take the most crucial step towards building a strong financial base.The above list of Top 5 Short-Term Investment Options to Grow Your Wealth Quickly comes handy for that.
So,which option you are going to invest in ? Do not forget to comment below!!
You might also like to read : 3 Financial Investments That You Must Avoid https://thebrightdelights.com/3-financial-investments-that-you-must-avoid-save-yourself-from-these-investments/