Need for funds may well arise anytime. Keeping this truth in thoughts, most people today look for avenues to park dollars for a quick duration even if the returns are decrease. For meeting quick-term targets and for keeping sufficient money to meet any monetary exigency, you also have to have to have an emergency fund handy. If you want to know as to exactly where to invest for the quick term in India, there are many solutions obtainable for you. The returns may well nonetheless be larger in them, than what your savings account may well be providing, of about 3 per cent.
Overall, there are some investment solutions that carry fixed returns when in other individuals, the returns are linked to the market place and hold fluctuating. One issue that you have to have to assure is that you do not select any equity-linked investment for quick-term requires. For quick-term targets, generally hold away from equity-backed merchandise such as equity mutual funds or shares.
Term Deposits
Among the investment solutions that provide fixed returns are fixed deposits (FDs), firm deposits, post workplace term deposits and so forth. You can park dollars in bank FD from 7 days to up to 12 months for quick term requires or in the post workplace 1-year term deposit. Bank FD schemes may well also be looked at for parking funds for targets that are about 3 years away.
Debt funds
Apart from them, there are debt fund solutions in which there is no assurance of returns but the funds can be accessed at quick notice. The prospective to produce higher helpful returns is there in debt funds compared to fixed-earnings merchandise. Within the debt funds there are many categories, some of which suit quick term requires – liquid funds, ultra-quick duration funds, and dollars market place funds.
Of the 16 debt fund categories, generating the proper option is vital as some of them could be more volatile than the other individuals. Some of the debt funds that you may well discover are:
Liquid fund: Here, the investment is made into debt and dollars market place securities with maturity of the underlying securities up to 91 days.
Ultra-quick duration fund: Investments are made into debt and dollars market place instruments exactly where the maturity of the underlying securities is amongst 3 months and 6 months.
Low duration fund: The investment is made into debt and dollars market place instruments exactly where the maturity of the underlying securities is amongst 6 months and 12 months.
Money market place fund: The investment is made into dollars market place instruments exactly where the underlying securities have a maturity of up to 1 year.
Floater Fund : An open ended debt scheme predominantly investing in floating price instruments. Curent, these funds are searching appealing as far as returns are concerned.
Medium to Long Duration Fund: Such funds have investment in Debt and Money Market instruments such that the Macaulay duration of the portfolio is amongst 4 –7 years
Do not compromise on security even when parking funds for quick term and also hold an eye on the taxation aspect. Remember, the funds invested in quick term investments may well have to be redeemed at quick notice and therefore know how lots of days will it take for the funds to hit your bank account ahead of investing in them.