In the world of investing, it is always said that you should invest your money according to both short-term and long-term goals. The reason is simple: if you suddenly need money, you won’t have to break your long-term investments. In this situation, short-term investments can be very effective.

If you want to invest for just one year or less and are looking for safe and stable investments with good returns, the market offers numerous options. Here, we will tell you about 5 short-term investment options that have the potential to provide excellent returns in a short period.

Recurring Deposit (RD)

If you cannot invest a large sum of money at once and want to contribute a small amount every month, then a Recurring Deposit is the right option for you. An RD works much like a piggy bank, where a fixed amount of money is deposited every month.

Bank Fixed Deposit (FD)

Bank FDs are considered the most reliable option for those who make a lump-sum investment. You can open an FD at any bank for a tenure ranging from 7 days to 10 years. If you want to invest for a short term, a 1-year FD can be a good option. The post office also offers FDs with tenures of 1 to 5 years. Before opening an FD, be sure to compare the interest rates of both banks and the post office to ensure the best returns.

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Debt Mutual Fund

If you want to invest for 12 months and expect slightly better returns than an FD, then a debt mutual fund can be a good option. Debt funds invest 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 they are not entirely guaranteed.

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SIP (Systematic Investment Plan)

You can also start a short-term SIP. You can invest a fixed amount of money every month at a convenient rate. If needed, you can stop the SIP and withdraw the funds at any time. 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 considering the risks. Experts generally advise investing in SIPs for the long term.

Corporate Fixed Deposit

Corporate FDs are also a good option for lump-sum deposits. Many large companies issue corporate FDs to raise funds for their businesses. These work similarly to bank FDs but usually offer higher interest rates. Corporate FDs carry slightly more risk than bank FDs. However, if you choose an FD from a well-known, reputable company, the risk is significantly reduced. Typically, interest rates of 8% to 10% can be offered for tenures of 1-5 years.