There is really no definition of a short term. What is short term for one, maybe long term for another.

But, for the sake of readers and investors, let us define short term as a period of 1 year and less than 1 year.

Let us now see some short term investment ideas in India with the time frame mentioned above

Yes Bank Savings Account

If you are not certain, when you are not going to remove the money, we recommend trying Yes Bank Savings Account. With an interest rate of 6 per cent, it is almost 2 per cent above the interest rates of most savings bank account in the country.

The one good advantage of this account, is you do not have to break it. Let us assume, you open a 60-day fixed deposit, hoping that you would need the money after that period. If you suddenly need after 25-days and break the deposit you would be penalized. In the case of Yes Bank Savings account there are no such penalties.

Also remember, that interest rates on balances in savings account are more tax efficient than the FDs. Interest on balances in the savings account qualify for tax exemption up to Rs 10,000 in the savings account.

From 9 months To 1 Year

If you are looking at investing sums of money from 8 months to 1 year, we suggest that you go with the deposits of RBL Bank.

You get an interest rate of 8.25 for this tenure with the annualized yield going to as high as 8.51 per cent. This is pretty decent considering the present interest rates on bank deposits, where you can barely get 8 per cent.

Ultra Short Term Bonds

Ultra Short Term Bonds can be considered for a very short duration. However, these are not the best in terms of returns, as returns can also be varied. Apart from that the other problem is that they are not very tax efficient if your holding period is very short.

Select shares can offer you good dividend yields

If you are looking to invest for a period of 6-12 months, buying into high yielding dividend stocks may not be a bad idea.

For example, you can look at stocks like NMDC, which have the potential to give a dividend yield of as much as 8.5 per cent. NMDC last year declared a dividend of 8.5 per cent, at the current market price of Rs 98, the yield works to neat 9 per cent.

Another interesting thing about it is that dividend is tax free in the hands of investors, making them very tax efficient.

However, one must also note that these are not the safest bets in the market place. For example, should share prices fall, they have the potential to drop along with the stock markets, thus lowering your returns.

However, there is less amount of risk involved if you hold them for the long term.Coal Indis is another stock that offers very hgh dividend yields.

Conclusion

When an individual is choosing the best short term investment idea, he has to keep a host of things in mind. One is the liquidity. For example, the best liquidity in the present circumstances would be the Yes bank Savings Account.

With an interest rate of 6 per cent, it remains one of the best short term investment ideas.

Apart from this it also depend on the risk one is willing to take to chase slightly higher yields.

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