Want to know Best investment for 3 months in India? Well you have landed on the right article .
When you are looking to invest your money you might want to consider putting it in a few different options at any given time, so that you can access your funds when the time comes.
For many people, the traditional savings account is the best option. Investors, however, have an array of other short-term options available to them.
What is a short term investment?
There are a large number of investment strategies which are designed for fairly short-term returns, such as those that are intended to provide a significant return in a relatively short period of time.
This kind of investment strategy is typically intended to provide a significant return in a short period of time. Short-term investors who are seeking option investments that will last for many years generally do not intend to wait years in order to maximise their money.
Unless they are looking for safe and predictable investments that increase their wealth every year, they will not wait to invest for years.
What they prefer instead is quick returns on their investment. To achieve this, they tend to turn to short term investment plans.
Short-term investment plans are able to provide one with maximum returns in order to help them achieve their financial goals, but they won't achieve massive results as long-term investment options might.
In the investment world, short term investment plans are often regarded as an attractive option since they carry a lower level of risk than their longer-term counterparts.
Benefits of the short term investment
1. A flexible approach
Because of their flexibility, short-term investments are less risky than long-term investments because they are more flexible than long-term investments.
Investment companies that focus on short-term investments, or short-term investments, usually offer investment periods of less than one year.
2. Suitable for use in an emergency situation
Almost all of the advantages mentioned above are related to this advantage. You can withdraw any amount you want from short-term investments at any time since they're flexible, especially if you have an emergency.
Requirements for short term investment
There are two basic conditions that must be met for an investment to be considered as a short-term investment. The first condition is the availability of liquidity.
Also, as a part of this investment strategy, the investment should be of a short-term nature, ranging between 12 months and 24 months in length.
Even if the maturity date of a bond is close to 1 year, it is also considered a short-term investment plan even if the maturity date is near 1 year.
Equity securities that can easily be traded as a liquid fund are often referred to as marketable equity securities that are short-term investments.
How does short term investment work?
These companies will also have short-term investment accounts on their balance sheets, which allow them to take advantage of their strong cash flow.
In the past, it has been observed that companies who are in a strong cash position are able to borrow excess funds and invest them in products such as bonds, stocks, and Treasury bills, which accrue interest at a higher rate on the same basis as savings accounts.
Best Investment for 3 months in India
1. Fixed Deposits
One of the best place to invest money for short term is by starting a Fixed Deposit (FD). Most banks offer this service, and it is another popular method for accumulating a corpus.
The investment typically takes place for a specific period of time, usually between seven and ten years, and there is usually a fixed return on the investment.
How to Open Account
- You can open a Fixed Deposit with a bank or NBFC from the website of the institution which you want to open the account with.
- You will need to create or login with an existing login ID.
- Click on the option Open FD account to get started.
- Make sure that you include the necessary information (such as the amount of the principal, tenure and nominee).
- Upon confirmation, proceed to make the payment via a net banking account.
Rate of return
An annual rate of 2.5% to 5.5%
Duration
Fixed deposit accounts range in tenure from 7 days up to up to 10 years, making them one of the most dependable and safest investments short-term investors can make. Fixed deposit accounts can be renewed upon maturity, and they can be reinvested.
Taxability
A person with FD will be subject to a high-income tax rate of up to 30%, depending on his or her income level. In addition, the tax will apply to the accumulated interest. Investors do not receive a tax deduction for fixed deposits.
2. Recurring deposits
Many people will choose to park their money in short-term investments as this is the most common and convenient option to do so.
Banks offer this type of account, which is good for short-term investments, and it can be opened in most of them. With these accounts, you have the option of earning a fixed rate of interest on your money until it is repaid.
How to Open Account
In order to access your account online, you will need your login name and password. Once you have received your Net Banking activation email, you will be able to access your account by entering those credentials.
Firstly, you will have to select the option for opening an RD account. You will need to tell us how much you want to deposit each month and how long you want the Recurring Deposit to continue running for if you are registering for a new account online.
Upon completing this step, you can link your savings account to this account to be able to make regular transfers of funds to it, as well as set up automatic payments each month by placing a standing instruction.
Rate of return
An annual rate of 4% to 6% is expected
Duration
For tenures up to 10 years, one can open an RD account for a minimum of 6 months and in 3 month increments after that
Taxability
An individual's interest earns on the amount he or she invests, there is a tax on that interest corresponding to the tax slab the individual falls into. The interest earned by an individual is added to the individual's income which is taxable.
It is important to note that the TDS will be deducted in cases when the interest earned exceeds Rs. 10,000 in short-term investment plans.
3. Debt mutual funds
If any earnings have been generated by these money market funds, then they will normally be invested in debt instruments in the same way such as government bonds, short-term government bonds, commercial paper, corporate bonds, and other similar money market instruments.
People who prefer a less risky investment option and are in search of better short-term returns may want to consider this option since it is one of the best ones available.
How to Open Account
- Make sure you enter all the information requested.
- The amount, the maturity date, and all other details regarding the investment should be entered in the appropriate fields.
- It takes less than five minutes to complete your e-KYC, and it will not take longer than that.
- Make sure you choose the right plan from the hand-picked debt funds that meet your needs.
Rate of return
The rate of return on the investment is between 8% and 11% per year
Duration
Debt funds that invest in 3 months investment plans are categorised into three categories based on their tenure.
- The liquid fund option is simply the alternative to the liquid fund option and allows you to invest in money market and debt securities whose maturities range from 30 to 91 days.
- Funds with an ultra-short duration - Funds with an ultra-short duration are those which invest money in debt instruments and money markets for a period of 3 to 6 months.
- Funds with a low maturity date-When investing in funds with a low maturity date, the money is invested in debt and money market instruments for a duration of between six and twelve months.
Taxability
The debt fund is subject to capital gains tax. There is a tax on short-term capital gains (STCG) which is applicable if the fund is held for a period of three years and the capital gain is realised.
If you hold a particular investment for a period of more than 3 years, the long-term capital gains tax will be applicable to the gains you make.
4. Corporate deposits
In a way, these fixed deposits operate just like bank fixed deposits, except that corporations collect them for expansion and operation rather than a bank.
Since the risk of default is higher than that of bank deposits, the interest rates are slightly higher than those of bank deposit accounts.
How to Open Account
The present-day is characterised by the existence of a number of companies that provide both cumulative and non-cumulative rates of interest.
Senior citizens may be eligible for a higher interest rate from some companies. The company also offers some employees higher interest rates if they open a FD with the company.
Rate of return
The expected return is between 6% and 8% per annum.
Duration
Duration: between one and three years
Taxability
The interest earned from your mortgage loan is added to your income and is taxed according to your prevailing income tax bracket.
5. Stock Market
When it comes to short-term investments, stock markets are considered to be the best choice when it comes to investing and earning maximum returns.
It would be ideal if you could make yourself aware of the right stocks and invest in them for a few months so that you could double your investment. The chances of losing all your money if you place a bet on the wrong stocks are very high.
How to Open Account
First of all, you need to decide which broker or firm you want to work with.
Do a comparison of brokerage rates.
There are some brokerage firms that offer discounts depending on the amount of trades carried out by their clients.
Secondly, you should contact the brokerage firm or broker and inquire as to the procedure for opening a trading account.
The first document should be completed.
Rate of return
It is expected to return between 10% and 100% per annum
Duration
Approximately a month to a maximum of five years
Taxability
In terms of taxation, the tax rate is determined once the returned funds are added to your income tax gain in order to calculate the tax rate.
6. SIP in equity mutual funds
The use of systematic investment plans (SIP) over a relatively long term, as opposed to a traditional mutual fund or stock portfolio, is a more effective way of investing.
On the other hand, they can also be used in the short-term, to get some decent returns over the short-term period.
How to Open Account
Before investing in a mutual fund, you will need to complete the KYC process. By filling out the KYC registration form and submitting self-attested copies of your ID and address proof,
you can do this at a KYC agency (KYC Registration Agency) online. Once you have chosen the fund house you wish to invest in, go to their website and choose the mutual fund scheme that you prefer.
Rate of return
It is estimated that the return on investment will range from 8% to 15% per year
Duration
The duration of the program is between 6 months and 5 years
Taxability
In the same way that debt mutual funds calculate their returns based on the short-term capital gains, equity mutual funds calculate their returns on the basis of both short-term gains and long-term gains.
7. Savings Account
It is no secret that among the most popular short-term investment options in India, the Savings Account has dominated the market.
If you have extra cash that you would like to keep and earn interest on, you could open a savings account at a bank or financial institution.
In order to provide maximum liquidity to the large numbers of users, a wide range of investments can be withdrawn at any time.
How to Open Account
Select the application method you wish to use.
Collect the information necessary to identify you.
Please provide your contact information.
Click on "Select a Joint Account or a Single Account".
Make sure that you agree to the terms and conditions.
You can select the amount of your deposit.
Then you should submit your application.
Rate of return
The return on investment is between 3.5% and 7%, depending on the type of bank.
Duration
There is no time limit for the duration of the event
Taxability
As an additional income, interest from a savings account is taxable because it is regarded as one of those additional incomes.
8. National Savings certificate
An NSC (National Savings Certificate) is a short-term investment account in which you can save taxes. It can be obtained at any post office. Due to its government backing, it is a scheme with low risk and a fixed rate of return.
Notwithstanding the fact that, based on the decisions taken by the Finance Ministry, the interest rates of NSC are subject to periodic change as well.
How to Open Account
The application form for the NSC can be found here.
To apply for the NSC, investors must submit an original identification document such as a passport. A permanent account number (PAN) must also be submitted. An ID card or driving license is also required. ...
Photograph.
Address proofs such as a utility bill, passport, telephone bill, bank statement, plus a check are all acceptable forms of proof of address.
Rate of return
The return on investment was 6.8%
Duration
Approximately 5 years in duration
Taxability
You can take advantage of tax benefits from a 5-year NSC if you buy them under Section 80C of the Income Tax Act, but the interest that you earn on these investments will be taxable.
9. Treasury securities
With the backing of the government, Treasury Securities provide the safety of a capital pool and the appreciation of the value of the capital.
In terms of keeping your assets in a safe place, Treasury Securities are helpful, however, their return rates are lower than those of debt fund investments.
How to Open Account
In your Internet browser, open the address bar and enter the web address www.treasurydirect.gov. On the TreasuryDirect home page, you will find the option to "Open an Account".
In the following list of options, select "TreasuryDirect - Open an Account" from the list. Follow the steps on the "Select a Service >> Introduction" page to open an account.
Rate of return
An average return of 7.8% is what you can expect
Duration
The duration of the project is from 91 days to one year
Taxability
As these are classified under the income from other sources category, it would make sense to pay taxes according to the income tax slabs.
Conclusion
The good news is that now you will no longer have to worry about things like where to invest and how much to invest. For those of you thinking of investing your money in short-term investment plans, then the above-mentioned investment options are likely to be very rewarding, giving you a chance to start thinking and investing immediately.
I hope you liked our article on Best investment for 3 months in India, if you have any comments or suggestions do share them in the comments below.
Frequently Asked Questions
Q1. Which investment gives the highest return?
Short-Term & Ultra Short-Term Funds provide the highest returns among all the options.
Q2. Is short term investment an asset?
As far as accounting purposes are concerned, short-term investments can be considered current assets. As a result, a current asset can be defined as a financial asset that, in the course of one year, can be converted into cash.
Q3. Which is the best investment in India for middle class?
For the lower class and middle-class sections of the Indian population, PPF is one of the most popular investment options.
It is possible to open a PPF account at a post office or in an authorised bank and to begin investing straight away with a minimum amount of Rs. 100 per year to earn guaranteed, tax-free returns.
