Many a times you may have large amount of resources that need to be deployed immediately as short term investments.
They may need to be liquid, tax efficient as well as offer high returns. We are considering various options under short term investments, including those as low as 15 days to as much as 1 year. Take a look at some of the best short term investment options.
Bandhan Bank short term deposits
If you have money to place for between 6 and 8 months, Bandhan Bank FDs has to be among the best short term investment plans.
You get an interest rate of 7 per cent on deposits of 6-12 months. No government or large private sector bank in the country currently offers you an interest rate of 7 per cent on a short term deposit. So, this can be a good short term investment option. It can be easily encashed, making it very liquid. Remember, there might be the applicable charges on the FDs for early withdrawals.
IDFC Bank Fixed Deposits
You get 8 per cent interest on 271 - 365 days deposit at IDFC Bank. In fact, if you can go slightly beyond 1 year, you would get 8.25 per cent, which is the best in its class. Senior citizens get 8.25 per cent and 8.75 per cent respectively.
Most banks charge 1 per cent on early FD withdrawal - there is no such charge in the case of IDFC Bank deposits.
RBL Bank Savings Account
This is the best place to park temporary money.
Say for example, if you have sold say a property and need to keep the money liquid to buy another property, you can open an RBL Bank Savings Account.
You get interest on savings bank account of up to 7.5 per cent, with other benefits like accident insurance cover of Rs 5 lakhs. You have a choice of placing in bank deposits, but, if you need the money early, you have to pay a pre-payment charges for early withdrawal.
Also remember, that savings bank account are exempted from interest income up to Rs 10,000.
The problem with short term and or long term Fds is that if you withdraw them early there is an unnecessary penalty of 1 per cent levied.
Hence, placing short term requirements in banks that offer high interest rates on savings account is the best bet. Yes Bank offers an interest rate of 6 per cent on its savings account.
Liquid Funds are mutual fund schemes, which invest in short term securities like government securities. They can offer you returns just like bank deposits. They are not as liquid as bank deposits, but can be slightly more tax efficient. Go for them only if you understand them.
Like Yes Bank, Kotak Bank also offers an interest rate of 6 per cent on its savings account, which makes it a decent proposition for investment.
Ultra Short Term Funds
They are also like liquid funds and are mutual fund schemes. Look for them, as they offer good returns in the short term.