Short term investments – Types of short term investments

What Are Short term investments?

Those who want to avail returns within a short period of time can go for short term investments. The duration of these investments can range from months to three years. The returns and time duration depends on the investment product and risks involved in it. The types of short term investments are savings, deposits, bonds, etc. If you are looking for quick returns, then do read this.

Savings account and deposits

Those who are not willing to take any kind of risks can surely go for savings account and deposits. A savings account is not a new term for a layman. If you want to avail quick returns, then you can open recurring deposit accounts. You just need to contribute a part of your income to this account and wait for up to one or even five years. Some banks have also started recurring deposit facility for 6 months. You get the contributed amount as well as interest after completion of the deposit period. Fixed deposits are also available for a short term period.

Debt Market

If you are willing to take little risks, then you can go for debt market instruments. In this market, income securities of fixed nature and features are traded. As these instruments are mostly issued by the government entities, the risks involved in it are less. If you are looking for decent returns, regular cash flows and want avail tax exemptions, then you can surely invest in the debt market funds.

Gold instruments

A smart option for investing for a short period of time is gold investment. As there is increase in the prices of gold on daily basis, you can invest in gold funds. You can even save the cost of storing physical gold and moreover, you do not have to carry the risks of holding physical gold.

Money Market Accounts

Commonly known as liquid funds, money market accounts are investment of short term nature. It helps in the protection of capital amount and is supported with increase in returns. The examples of money market accounts include Certificate of Deposit and Commercial Papers. Before investing in it, you need to be well-versed with the related terms and conditions.

Stock Market

There is high amount of risks involved in share market trading. It is the best option who is willing to take higher risks and is looking for greater amount of returns. You need to know and implement the tactics involved in share market trading.

Treasury securities

This investment option is possessed with high liquidity feature and provides good returns even for a short period of time.

Fixed Maturity Plans

The fixed maturity plans are close ended funds. The benefit of this type of fund is that it is subject to only dividend distribution tax.

Conclusively, you have diverse options for making short term investment. But you need to be willing to take risks for earning higher returns. Before investing in short-term options, you must be clarified with the terms and conditions governing short-term investments. You must always think about diversifying your investment portfolio so that the risks are distributed.