Best Short Term Investment Plans
12 Apr 2021

Best Short Term Investment Plans

Is it possible to plan for short-term funds? Yes, it is, here are some options.

The hard choice between savings and spending on things we love is one that we face every day. Great offers, a wide variety of products and services, tempt us to spend rather than save. But what if there was a way to invest and still have enough funds for you to splurge? The answer lies in short-term investments.

TLDR Points

  • Short-term investments are great for your contingencies.
  • They also teach savings attributes.
  • A typical maturity period can range from 1 day to 3 years.

Short-term investments can help you meet contingencies and immediate financial goals. These type of plans do not affect your ability to purchase the things you love. They allow you to spend without guilt. Short-term investment plans also help shape a vital attribute – a ‘savings mentality.’ Let us take a look at which short-term investment plans are available for you in India.

Best short-term investment options in India

The best way to invest money short-term is to find an investment type that suits your financial goals. The best short-term investments allow you to live happily within your means and provide decent returns on maturity. You can start with a basic savings account, and as you gain experience, you can venture into the world of short-term mutual funds.

Savings accounts

One of the easiest and best short-term investments is opening a savings account. It helps streamline where your money goes and keeps your income in one place. Your account also earns quarterly or half-yearly interest which is an added advantage. With digital banking and UPI, transferring funds for investments is also easy and contactless!

Why savings accounts make sense:

  • Open an account seamlessly
  • Access your cash easily whenever you need it
  • Earn interest on the balance in your account

Liquid funds

These are funds that invest in securities of deposits and short-term government certificates. Thanks to their fluid nature, entry and exit are relatively easy. You can choose schemes that have maturities up to 91 days, ensuring that you meet your contingent or immediate financial goals. While linked to fluctuations in the market, liquid fund NAVs rarely ever see dips in their NAV (net asset value).

Why liquid funds make sense:

  • Easy entry and exit with faster redemption time
  • The minimum investment (for some funds) is for as short as 1 day
  • Rarely affected by market fluctuations
  • Great for investing substantial amounts (like a year-end bonus) at one go to get relatively good returns

Recurring deposits

If there’s a new expensive gadget you’ve been eyeing or a backpacking vacation across Europe, then recurring deposits make for great short-term investments. While the interest rate may be nominal, it encourages you to save regularly by setting aside money in your savings account on a fixed date. This money then gets transferred to your recurring deposit, and on maturity, you get the principal and the interest earned. Recurring deposits can be short-term investments as well as long-term investments, depending on your choices. For those who need help saving money, it is a great way to start.

Why recurring deposits make sense

  • Flexible terms and investments
  • Encourages a ‘savings mentality.’
  • Easy to foreclose and ensure liquidity

Short-term fixed deposits

Another great way to invest safely and earn interest is through short-term fixed deposits. You can open a fixed deposit account with your bank and choose the tenure you prefer. Most banks offer these deposits in maturities ranging from 7 days to up to three years. On maturity, you can either withdraw the entire principal and interest or re-invest it in another fixed deposit.

Why short-term fixed deposits make sense

  • Earn a fixed interest rate throughout the tenure.
  • Withdraw or re-invest after maturity.
  • Opt for a partial (premature) withdrawal before the maturity date for emergencies.

Short-term mutual funds

Some of the best investment plans for 3 years may easily be short-term funds. Short-term debt funds are managed conservatively and invest in securities that will mature between 1 and 3 years. The apparent goal with these kinds of short-term investments is to ensure that capital remains safe while also delivering some form of modest capital appreciation. While there are no specific tax benefits in investing in short-term funds, they can be a useful tool to save some leftover funds that you have in the short-term.

Why short-term funds make sense:

  • Flexible tenures
  • Moderate capital appreciation
  • Easy entry and exit


Short-term investments can work wonders for your savings. These types of investments should be the norm and not one-off. In tandem with long-term investments, short-term investments have the potential to allow people to live lives comfortably and debt-free if done well. The best short-term investment plan for each individual may vary based on their goals, but while the means may vary, the outcomes that they deliver are similar. Money that you have access to should be put to work, and short-term investments do this while ensuring you have access to the cash if you need it. Start short-term investments today and watch as your goals are met with perfect precision if your planning is done correctly.

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