Money Magazine - What are Short Term Investment Options?

Investment is the best way to secure your future financially. While all of us want to invest our money, each and every individual investor has different goals when he thinks of investing his money. These goals can be short term as well as long term. If you are looking to invest your money for a short time period, there are a variety of short term investment tools available at your disposal.

Short term investment options:

1) Savings account: Savings account is the most popular short term investment tool among investors. Not only the principal amount secured, banks also offer an interest rate ranging between 6-8% on savings account. Another important factor making savings account most widely accepted short term investment tool is liquidity of your investment, as savings account offers you access to your money at all times.

2) Gold: Since the time immemorial, if there is one asset which always gives returns on investment, it’s gold. Investing in gold for short term and long term is always rewarding in returns as well as it’s a very secure investment so your principal amount is not endangered.

3) Bank Fixed Deposits: After savings account, this is the second most popular mode of investment for Indians. This is because of the fact that Fixed Deposits offer higher rate of interest than savings account and your principal amount is secure at all times. Fixed Deposits do have a lock in period and maturity period, but you can break your fixed deposits any time you want by paying a marginal fee.

4) Treasury securities: Investing in treasury security is another very rewarding short term investment option available at the disposal of investors who are looking to get higher returns on their investment in a shorter period of time. The tenure of investing in treasury securities ranges between 91 days and 365 days.

5) Debt instruments: The biggest fear while investing in short term instruments is the risks involved. Debt instruments offer a risk free investment option for investors who are looking to get returns on their investment in a shorter time period. Debt instruments usually offer a 10.5% return on investment.

6) Large Cap Mutual Funds: For any investor who has a good risk taking appetite and is looking to get high return on his short term investments can look to invest in large cap mutual funds. The investment period for large cap mutual funds is 1 to 3 years and the rate of return varies with the company performance.
Short term investment tools offers exiting growth on return to investors who are not looking to invest their money for a short period of time. Though there are various short term investment tools which offer remarkably high return on investment, always invest after analyzing your risk bearing capacity and try to avoid investing where your principal amount is not secure.