While there is no substitute for hard work and no way for easy money, you can always put your money to work with a smart investment plan and save yourself some labor.
To the people who are new to the world of investments, let’s understand investment with this simple example. If there are two people A, an avid investor, and B, who is not into investments. Now both A and B get reward cash of Rs. 5000 for a project they completed together. Now A, being an avid investor, decides to invest that money while B deposits the money in a bank. A goes for a lump sum investment plan for 12 months with a return rate of 12%, at the end of the tenure, A has generated a profit of Rs. 600 on his reward cash. And B who put his money in the bank (assuming that he did not immediately throw a party from that money) generated a profit of only 3% that was offered by the bank. And his net profit at the end of the 12-month span was Rs. 150 only.
Come to think of it, in the pandemic hundreds and thousands of people lost their jobs which were their only source of income; people lost their jobs all the time during recession and companies shrinking. If you had to leave your job right now due to unforeseen circumstances, would you have enough money as a backup, to keep yourself from sinking for the next two years at least?
What are long and short-term investments?
While a long-term investment plan is one where you invest for more than a year. An example of this could be a retirement plan or saving to buy a house. A short-term investment is an investment that you make to withdraw the money in a short period, say between 6 to twelve months of time. The short-term investment plans are designed to give high returns and make your money work for you.
If you are an investor looking for short-term profit generation, here is a quick guide on the best short-term investment options to earn profits on your otherwise idle money.
Real Estate Short Term Investment
Real estate investments include purchasing, managing, and/or selling real estate property, for generating profit. This kind of investment is best for all kinds of investors, and the biggest perk of investing here is that you will always have a physical asset to back your investment.
While long-term real estate investments are more famous and prevalent, investors can generate good profit by investing for a shorter period as well.
A short-term investment in real estate would be one that lasts for 12 months or less. These investments have higher return rates if you invest in short-term projects.
The fix and flip property investments in real estate can give you maximum profits. Short-term rental properties, such as vacation properties can be good asset investments, as the demand for well-maintained vacation houses for tourists is very high.
You can also invest in fix and flip property, where you renovate your purchased property and then flip it for profits.
Short Term Debt Fund
A short-term debt fund is a Mutual Fund Scheme for investors which is for a smaller period like a year to three. This type of investment is a tax-efficient and investor-friendly scheme. With stable return and medium risk, another perk of investing in short term debt funds is that the investor does not have to pay for premature redemptions, but they could have to pay one if they redeemed the asset before the predetermined period of 5 days to 6 months approx (more or less).
Money Market Funds
MMFs are Mutual Funds that invest in short-term debt instruments, which give high returns. The MMF is considered a low-risk investment fund with very high liquidity. These short-term investment funds are purchased for up to 1 year, they include cash and cash equivalent securities along with high credit ratings, etc. If high liquidity with lower risks is what you are looking for, this would make a good investment option.
Post Office Time
The Post Office Time Deposit Scheme is a Government-funded investment scheme offered by India Post. This scheme is a reasonable and investor-friendly offer as you can start your investment journey with a minimum sum of Rs. 1000 only. Also, the minimum time before you can redeem your money is 6 months, and after that, you can withdraw your money at any time. The Indian Post lets you make investments between 1-5 years, so you can invest with ease and look forward to great returns.
Liquid Funds are the least risky debt funds of all. If you are looking to reap high profits in a very short time, you can definitely go for this fund. Fixed income securities ( such as bonds, treasuries, laddered bond portfolios) mature within a short span of 91 days. This fund is best for investors looking for the least risk and good returns. While the liquid funds in the past have provided a return of 7% to 9%, we can’t say that they are completely risk-free. Unlike many other funds, a liquid fund has no locking period, which means you can pull your money out anytime with prior notice of 24 hours only.
A treasury bill is a short-term borrowing instrument by the Government of India. These might be the best short-term investment for you, as their maturity period is less than a year. You can get decent returns in a very short span. Since T-bills are government-backed programs, they give an assured profit and that too at negligible risk of default.
In the T-Bills, an investor or buyer does not get any interest, instead, they are issued at a discounted rate and on reaching maturity, are redeemed at the actual value. So for instance if you purchased face value Rs. 100 you would get it at a discounted rate of Rs. 95 and on maturing you will redeem Rs. 100.
Presently, the government issues these bills in three tenors, 91 days, 182 days, and 364 days. You can choose a program that suits you.
Investment is a very necessary skill that every individual needs to possess in today’s time, but if your ways of investing have you more worried than relaxed, which is normal, then you need to take a break and make your own investment plan. Also is you fear investing, then you can start with short-term investments and gradually move to larger commitments. It is always suggested that you don’t rush, instead, take your time to figure out what works best for you and go forward with that.
At Assetmonk, we help you generate passive income by investing in the best high-return investment plans. You can connect with our Growth, Growth Plus, and Yield investment categories, to make maximum profits. We also offer an IRR of 14-21% which makes Assetmonk the best investment partner.
Short Term Investment FAQs:
If you are looking to invest for a short period and also generate a passive income, it is suggested that you invest in places that give least to moderate risks only. And our one-word answer would be Liquid Funds, they offer a return rate of 7-9 % and are also one of the least volatile categories of Mutual funds. You can invest for anytime between one to 91 days and see your money grow.
Stock Markets offer a return rate of 10-100% in a span of 6 months to 5 years, but if you are looking for a shorter and more definite period of time, then you can go for Treasury Securities that are for a span of 3 months to a year and their average return rate is 7.8%.
If you are looking for high returns at low risk, you can invest in MMFs, this Mutual Fund category works best for investors interested in high liquidity at low risks.
The average return rate of an MMF is around 6.3-6.8%.