Investors choose investment instruments depending on their financial goal, risk appetite and tenure. While most of the investors prefer long-term investments to build a corpus fund, there are many who prefer short-term savings.

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Short-term investment options generally come with a tenure of 3 months to 1 year. It’s advisable to choose a mix of capital safety and liquidity while selecting short-term investment options.

Here are a few important factors one must consider before investing in short-term investment instruments.

Why choose short-term investments?

Short-term investment plans are designed in a way to help provide good returns in a fairly short span of time. Notably, these plans are chosen to meet the expected near-future expenses as investors are not really inclined toward waiting for years to get their money multiplied.

Unlike long-term investment options, short-term investment plans can help to meet financial needs in near future. Also, these plans usually come with lower risks as well as offer more liquidity options compared to other investment avenues.

5 Best Short-Term Investment Options

Fixed Deposits: Opening fixed deposits in banks is one of the most secure options for investing for a year. FDs are also eligible for easy liquidity and banks also offer attractive interest rates. An investor can opt for fixed deposits for a tenure ranging from 3 months to 1 year, as a short-term option.

Recurring Deposits: Individuals can invest their funds in recurring deposits for tenure of six months to 10 years. With the option of monthly, quarterly or semi-annual payments, investors can set aside a portion from their income and place it in a way to avail higher returns.

Post Office Time Deposits (POTD): Those looking forward to investing their money for a tenure of one year can consider Post Office Time Deposits. While the current POTD interest rate stands at 6.90 per cent for one-year plans, withdrawals can be made after six months from the date of deposit.

Gold or Silver: Investing money in gold and silver is one of the promising options to put your money into. This investment could be done for both long and short-term durations. With the price of gold and silver increasing on a regular basis, the returns are also expected to increase after a tenure of one year.

Liquid funds: Money Market Accounts, also known as liquid funds are designed to provide capital security along with promising returns over a short period of time. With a brief maturity time limit of 91 days, the investment can be redeemed in a quick time, and offer comparatively higher interest rate than the other savings options.