There are many articles nowadays that recommend short-term investing in the stock market. But what is the best risk-free investment plan for the short term? Is there any other form of safe investments that can be made with less risk and more returns?
Why Short Term Investments?
There are multiple reasons to invest in short-term investments. Short-term investments are a great way to diversify your investment portfolio and reduce your overall risk. They also offer the potential for higher returns than other investments, such as bonds and CD’s. Additionally, short-term investments can provide you with liquidity in case of an emergency.
Short-term investments can be a great way to generate income. If you are looking for a safe and secure investment option, short-term investments may be the right choice for you. With short-term investments, you can earn a higher return on your investment than you would with a longer-term investment. Additionally, you can access your funds more quickly if you need to in an emergency situation.
Tax Benefits of Short Term Investments
When it comes to investments, most of us think about long-term goals. However, there are also benefits to investing for the short term. One of the main benefits is that you can get a tax break on your investment.
If you invest in a short-term plan, you can get a deduction of up to Rs 1 lakh on your income tax return. This deduction is available under Section 80C of the Income Tax Act.
Another benefit of investing in a short-term plan is that you can get your money back after a period of three years. This is known as the maturity period. If you need the money before the maturity period, you can withdraw it without any penalty.
Lastly, if you are looking for higher returns, you can opt for a short-term investment plan that offers a higher rate of interest. For example, there are some plans that offer an interest rate of 7%.
How to Handle Your Short Term Investments
When it comes to short term investments, there are a few things that you need to keep in mind. First and foremost, you need to make sure that you diversify your portfolio. This means that you should not put all of your eggs in one basket.
One of the best ways to diversify your portfolio is to invest in different asset classes. For example, you can invest in stocks, bonds, and mutual funds. By investing in different asset classes, you can minimize your risk and maximize your returns.
Another thing to keep in mind when it comes to short term investments is that you need to be disciplined. This means that you need to have a plan and stick to it. If you don’t have a plan, then you are more likely to make impulsive decisions that could end up costing you money.
Lastly, you need to remember that short term investments are just that – short term. This means that they are not a substitute for long term investment strategies such as retirement planning. Short term investments should only be used as a supplement to your long term investment plans.
What are Some of the Best Places to Invest in India?
There are a number of different places to invest in India, but some of the best include:
- The Bombay Stock Exchange: The BSE is India’s largest stock exchange and is a great place to invest in a variety of different companies.
- National Stock Exchange: The NSE is another large stock exchange in India and offers investors a chance to buy stocks in some of the country’s largest companies.
- Mutual Funds: Mutual funds are a great way to diversify your investment portfolio and can offer you exposure to a number of different companies. There are many different types of mutual funds available, so be sure to research them before investing.
- Fixed Deposits: Fixed deposits are a safe and secure way to invest your money and earn interest on it. Many banks and financial institutions offer fixed deposit accounts, so be sure to shop around for the best rates.
Top 5 Investment Options for 2019
1. Public Provident Fund (PPF):
The Public Provident Fund is a long-term investment option offered by the Government of India that offers guaranteed returns. The interest rate on PPF is revised every quarter and is currently set at 7.9%. Investments in PPF are exempt from taxes and can be made through any post office or designated bank branches.
2. National Savings Certificate (NSC):
The National Savings Certificate is another government-backed investment option that offers fixed returns. NSC investments are also tax-exempt and can be made through post offices or designated bank branches. The interest rate on NSC investments is currently set at 7.6%.
3. Sukanya Samriddhi Yojana (SSY):
The Sukanya Samriddhi Yojana is a government scheme specifically for parents wanting to save for their daughter’s future education and marriage expenses. Investments in SSY are exempt from taxes and the interest rate on SSY deposits is currently set at 8.1%. Parents can open an account in their daughter’s name at any post office or designated bank branch.
4. Fixed Deposit (FD):
A fixed deposit is a type of savings account offered by banks and other financial institutions that offers higher interest rates than a regular savings account. FDs have a fixed maturity period, typically ranging from 1 to 5 years, after which the deposited amount plus interest can be withdrawn by the customer .
5. Equity-Linked Savings Scheme (ELSS):
ELSS mutual funds are a type of investment fund that invests primarily in equity-linked instruments. ELSS funds have a mandatory lock-in period of 3 years, after which the investor can redeem their units. Investments in ELSS funds are eligible for tax deductions under Section 80C of the Income Tax Act.
There are a number of short-term investment options available in India, but which one is best for you depends on your goals and risk tolerance. If you’re looking for a safe investment with little to no risk, a fixed deposit or government bond might be the best option. However, if you’re willing to take on a bit more risk for the chance of higher returns, investing in stocks or mutual funds could be a better choice. Whatever your decision, make sure to do your research and consult with a financial advisor before making any final decisions. The best short-term investment plans in India are those that offer both safety and potential for high returns.
However, the best option for you will depend on your individual goals and risk tolerance. If you’re looking for a safe investment with little to no risk, a fixed deposit or government bond might be the best option. However, if you’re willing to take on a bit more risk for the chance of higher returns, investing in stocks or mutual funds could be a better choice. Whatever your decision, make sure to do your research and consult with a financial advisor before making any final decisions.