Are you looking for high returns or low risks? There is no quick fix for an individual who requires balancing a bootstrapped financial portfolio. It is also a tough challenge to select the best option of short-term plans with good returns with the least risk. As everyone is aware of an impending recession, it is the right time to prepare and address the fulfillment of some goals.
Identify the best type of short-term investment in 2023 depending on your specific needs. The information below will help you decide with clarity.
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- Categorize different goals to be accomplished in the allocated period.
- List of investments available in India.
- Understand plans and rate of return for a specified period.
- Will a combination of two or three plans work?
- Be aware of the threats involved (even if they are low).
Alert: We presume our readers know what a ‘short-term’ plan is. If not, here is a quick description: It is a process by which you can fulfill your allocated money goals by investing in under 4 years. Anything more than 5 years is usually considered long-term planning.
What Means Short Duration?
Investing for the short term reduces risk but comes at the expense of possibly better rewards that are only attainable from the most successful long-term investments. The Securities and Exchange Board of India (SEBI) recommends that the period of short-term funds fall somewhere between two to three years. This indicates that short-term funds can easily get invested in debt instruments with short maturities, in addition to somewhat longer maturities. There is a reduced chance of capital gains or losses occurring for funds that keep their durations on the lower side of the range of 1-3 years.
A person needs to have actual information in order to invest their money properly. In addition to this, in addition to the investment you make, it is beneficial if you have a strong understanding of subject-related topics such as technology, management, science, math, and so on. This is your primary factor to choose the best plan. Each individual or family has definite reasons to stash away money to accrue a return on investment.
* The Most Common Goals/Expenses Are
- Accumulating funds for higher education
- Wedding or travel loans
- A large-scale renovation of the property
- Saving funds to buy a car or second home/office
- Need for a high-end business laptop
Types of Short-Term Investments in India
Due to flexibility, they are popular to meet quick financial goals. You need not borrow money from friends, relatives, or even the bank. With security, getting cash in the allocated time is a relief to meet expenses. The only downside is the higher transaction cost in case you choose trading or investing in stocks. Identifying the right instrument makes all the difference.
* Meet Your Financial Objectives in 2023 with These Investments
- Liquid Funds
- National Savings Certificates
- Recurring Deposits
- Savings Accounts
- Fixed Deposits in banks or post offices
- Investment in metals like gold or silver/EFTS
- Debt funds for short periods
- Real-time forex trading
- Hedging with Assets
* Understand Plans and Rate of Return
Check the interest rates provided by the bank and learn about capitalizing on the best stocks for a specific term. The investment should fulfill the following criteria to meet your premeditated goals.
- Stability, without fluctuation in values after the term ends.
- Liquidity, when required with zero penalties to redeem the cash amount.
- Low transaction costs that do not bleed your finances.
You should be able to set your expectations without any unpleasant surprises with these pointers. We are adding a few more tips for clarity.
- Keep a focus on safety to redeem the cash when it is essential.
- Pick the investment according to the need not just the value or interest being provided. For instance, when you are saving funds for higher education, you probably know the amount required in advance. So pick the option of keeping the specific amount.
- It may happen that you would need money in advance. What should be done? Re-calibrate the needs and choose a buffer to get the funds before time.
* Will a Combination of 2/3 Plans Work?
As an investor, you must also realize that not all short-term strategies are equal. Therefore, make calculations to make a combination of 2 or 3 allocations. As the saying goes, “Don’t put all your eggs in one basket.”
The following table furnishes a basic idea for fetching optimal returns.
Rate of Interest
|Savings Account in the bank||3.5% to 7 %||Low||Differs with each bank|
|Recurring deposits||4-6%||Low||6 months to 10 years|
|Fixed deposits||2.5-5.5%||Low||minimum 7 days to 1 year|
|National Savings Certificates||6.80%||Low||5 years|
|Debt Mutual funds||8-11%||Medium||6 months to 3 years|
|Stock market||10-100%||Medium to high||1 month to 5 years|
|Real-Time FOREX trading||Betting on the future price index||Requires financial professional assistance|
|Hedging with assets like gold or silver||The investment comes with insurance against the asset risk||Requires financial professional assistance|
|Investment in Post offices||7.0%||Low||1 Year to 5 Years|
* Be Aware of Risks
To calculate the risk factor, make a goal-oriented portfolio. Are you willing to take a small risk or not at all? Age and responsibilities determine this decision. People above the age of 50 years normally prefer FDs, RDs, and Savings accounts. FDs are still the best go-to schemes that yield good returns. It is also secure and most Indian banks offer their customers’ a fixed rate of interest.
As the middle-class income is better, you can even consider liquid funds, stocks, and real-time trading. Several tech companies, real estate developers and startups are rising with IPOs. They provide opportunities to park funds in such instruments with quick maturity.
Now you should be ready to beat inflation and welcome 2023 armed with a wealth navigator. Hope you have enjoyed the information to meet your objectives.