Short-Term Fund Investment Tips for All Times
23 Apr 2020

Short-Term Fund Investment Tips for All Times

Looking for good returns in the near future? Try these short-term fund tips

During uncertain times, it can be challenging to think of the long term. Until things settle down, you may look for short-term investments. Fortunately for you, there are several excellent options available. Our short-term investment guide will help you along the way.

Tip #1: Choose fixed deposits

Generally, when you say fixed deposits, people think long-term – a year, two, or even five years. But did you know that you can invest in fixed deposits for much shorter periods? For example, you can open a fixed deposit through the DBS Bank app for periods ranging from 90 months to five years. We offer the most competitive and attractive interest rates too. 

So if you are unsure of making any long-term investments, one of our short-term fund tips is to choose FDs. This way, you can ensure that you get decent returns and your investment is protected against inflation. Moreover, a short-term fixed deposit also acts as a contingency fund. Instead of borrowing, withdraw your FD.

Tip #2: Invest in short-term mutual funds

Most people associate mutual funds with equity. But if you want to play it safe one of our other short-term fund investment tips is, go for debt mutual funds. At DBS Bank, we offer an extensive choice based on your risk profile, your personal financial goals and expected returns.

In the current environment, let's take a look at some of the short-term fund guide has in store for you:

  • Short-term debt funds: As the name suggests, these funds are meant for those with a short time horizon. They invest in instruments with maturity periods ranging from one year to three years. You do need to understand the risks. Sometimes when interest rates rise, yields may fall, leading to a drop in net asset values (NAVs). However, short-term funds are not particularly susceptible to interest rate risk, so you don't have to worry about reduced returns. Click here to read more about debt funds.

  • Liquid funds: If you want to invest for a very short term period, liquid funds, or money market funds, could be the right choice. These funds invest in money market instruments with very short time maturities (up to 91 days), and ideal for investors with investment horizons ranging from a day to three months. Liquid funds invest in instruments with very high credit rating, and thus the risk levels are quite low. Their portfolios may include treasury bills, certificates of deposit and commercial paper. Click here to know more about liquid funds.

  • Ultra short-term debt funds: These are funds that invest in instruments with maturity periods of less than a year. They offer slightly higher returns than liquid funds and are best suited for parking any short-term surplus cash that you may have. Like most other short-term funds, these too involve less interest rate risk than their longer-term counterparts.

So these were our short-term investment tips and now would be the right time to consider them. DBS Bank offers you smart choices, and our app also has some unique features. First, all our mutual fund schemes have a five-stars rating by Morningstar™. It is one of the best investment research firm in the world. Second, you needn't worry about whether a mutual fund is right for you.