Short-Term Investment: Want to invest money for just 1 year? These 5 investment options can give you better returns

Short-term investments can help you secure your long-term savings. For a one-year investment, there are several options in the market that offer good returns along with security. Each option has different risks and returns, so understand your needs and risk tolerance before investing.

In the world of investment, it's always said that you should invest your money keeping both short-term and long-term goals in mind. The reason is simple: so that you don't have to break into your long-term investments when you suddenly need money. In such situations, short-term investments come in very handy.

If you also want to invest money for just one year or less and want decent returns along with security, then there are several options available in the market. Here, we are telling you about 5 such short-term investment options that have the potential to give better returns in a short period.

1. Recurring Deposit (RD)

If you cannot invest a large sum of money at once and want to save a little money every month, then a Recurring Deposit is the right option for you. An RD works just like a piggy bank, where you have to deposit a fixed amount every month.

Upon maturity, you receive the total deposited amount along with interest. You can open an RD for one year or more. This facility is available in almost all banks. Before investing, be sure to compare the interest rates of different banks.

2. Bank Fixed Deposit (FD)

For those who want to invest a lump sum, a bank FD is considered the most reliable option. You can open an FD in any bank for a period ranging from 7 days to 10 years. If you want to invest for the short term, a one-year FD can be a good option.

The post office also offers FD facilities for 1 to 5 years. Before opening an FD, be sure to compare the interest rates of both banks and the post office to get better returns. 3. Debt Mutual Funds

If you want to invest for 12 months and are looking for slightly better returns than a Fixed Deposit (FD), then debt mutual funds can be an option. Money in debt funds is invested in safe instruments like government bonds and debt securities.

These funds usually have a fixed maturity period. The risk is low, and the returns can be slightly better than FDs, although this is not entirely guaranteed.

4. SIP (Systematic Investment Plan)

An SIP can also be started for the short term. In this, you can invest a fixed amount every month according to your convenience. The SIP can be stopped and the money withdrawn at any time if needed.

SIPs are market-linked, so they involve risk. Experts estimate an average return of 12%, but there is no guarantee of returns. Therefore, invest in SIPs only after understanding the risks. Experts usually recommend long-term SIPs.

5. Corporate Fixed Deposit

Corporate FDs are also a good option for investing a lump sum. Many large companies issue corporate FDs to raise money for their businesses. They work similarly to bank FDs, but the interest rates are usually higher.

The risk in corporate FDs is slightly higher than in bank FDs. However, if you choose an FD from a strong company with a good rating, the risk is significantly reduced. Interest rates of 8% to 10% are typically offered for periods of 1 to 5 years.

FAQs

Q1. Which is the safest investment for 1 year?
Bank FDs and RDs are considered the safest investments.

Q2. Is it advisable to do an SIP for the short term?
Yes, but SIPs are market-linked, so they involve risk.

Q3. How much risk is there in Corporate FDs?
The risk is slightly higher compared to bank FDs, but it is lower in companies with good ratings.

Q4. Are debt mutual funds better than FDs?
The returns might be slightly better, but they are not guaranteed like FDs.

Q5. Can short-term investments be withdrawn quickly if needed?
Yes, most short-term investments offer good liquidity, but a penalty may apply in some cases.