The biggest USP of short-term investment options is its liquidity. As an investor, you do not have to wait for an extended period to redeem your investment units.
However, your investment outcome depends on multiple factors, and your choice of investment plans is one of them.
Though selecting the most suited investment instruments should not be that challenging, the presence of multiple options tends to over complicate things.
Nevertheless, to provide the required momentum in your quest for the best short-term investment plans this March, here’s a list for you.
Take a quick look below to gain insights into a few popular investment options for the short-term in March 2021!
Top Investment Options For The Short-Term
These are among the most popular options where you can invest this March –
Government And Corporate Bond
These bonds are simply loans that the government or corporate bodies take out from the public. They offer fixed returns at a regular interval or on maturity. Since reputed entities back bonds, they expose investors to low risk levels. Based on maturity, bonds can be long-term, mid-term, or short-term investment options. They come with maturity periods ranging from 1 year to 5 years.
Money Market Securities
Reputed financial institutions, government, and big corporations launch these securities to raise capital. Money market securities are counted among the top short-term investment avenues with a tenure of less than a year.
Invoice financing is rapidly becoming one of the most popular working capital solutions for small and medium businesses. As more entrepreneurs are inclining towards this financing scheme, the demand for such investors is also at its peak. This alternative means of investment allows individuals to invest in company invoices of businesses with high credit ratings. The entire investment process is carried out through the bill discounting or factoring platforms. These short-term investment options have historically offered returns anywhere between 12% and 20%, making them one of the most lucrative financing options.
Certificates Of Deposit
This savings account requires investors to invest a fixed sum of money for a given term. At maturity, investors can obtain back the invested amount along with interest. In general, a certificate of deposit comes with a maturity period ranging from 6 months to 5 years. You can invest in a CD whose maturity period matches your investment objective.
These bills come with a maturity period that stretches up to a year. The government launches this short-term investment instrument at a discounted rate. However, note that the same is redeemed at face value. The USP of a treasury bill is its liquidity and the low-risk quotient.
They are a type of debt MFs, which come with a maturity period of 91 days. Liquid funds primarily invest in debt securities with a short maturity period and are considered the safest mutual funds across all categories. They generate higher returns when compared to traditional investment options like fixed deposit schemes.
Short Duration Fund
These funds invest majorly in debt and money market securities and come with a lock-in period ranging from 1 to 3 years. These funds come with a risk level relatively lower than long and medium duration funds. These funds are known for providing steady interest returns. If you decide to hold onto short duration funds for over 3 years, you can benefit from indexation on capital gains. It makes the fund more tax-efficient than fixed deposits.
In case you are looking to park money for a short time, say a day or so, you may consider short-term investment options like overnight funds. However, it would help if you accounted for the accompanying risks before investing in any of these options.
You can find multiple short-term investment options in India performing exceptionally well this month. However, before making any decision purely based on the current performance, note, the best investment option may not be the most suited for your portfolio. So, to align your investment choice with your portfolio, weigh your risk profile and investment goals.