Best Ways to Investment Plans in India 2023

What exactly are investments with a short term?

Short-term investments are assets that can be turned into cash or sold within a short period, often between one to three years.

In other words, short-term investments may be liquidated quickly. Short-term bonds, Treasury bills, and other money market funds are examples of common financial products that may be used to make short-term investments.

Trading over a short period of time, often known as “day trading, involves a high amount of speculation and, as a result, substantial risk. Let us see the best investment options in India for the short term.

Advantages of Short-Term Investing

• Investor has more freedom with short-term investments since they do not have to wait for the security to mature in order to obtain the cash from the investment. On the other hand, long-term investments can be cashed out by selling the assets in question on the secondary market; however, this results in fewer earnings for the investor.
• Investors can gain significant profits in a very short period of time.
• Because less money is committed in each transaction, the risk involved is significantly reduced.

Disadvantages of Short-Term Investing

• Investing over a short period of time incurs considerable expenses because of the high transaction volume involved and the brokerage commission fees that are associated with it. Short-term investments typically result in lower returns because of a number of factors, including taxes and inflation. You can see short-term investment plans with high returns in India.
• It requires a certain amount of competence as well as a lot of time because investors need to carefully observe price changes in order to locate good buying and/or selling opportunities.

In the world we live in now, everyone wants things right away. Even though we know that being patient and following rules can lead to better results, we want to reach all of our goals as quickly as possible.

We want to make the most money in the least amount of time. That’s why we’re always looking for the best ways to invest our money so it can double or triple in value.

There are ways to invest your money that can help you make more money, but it can be hard to find those ways. Plus, it may take longer than you think for them to work the way you want them to.

So, if you want to grow your wealth, you need to find an investment plan that fits your investment time frame and the amount of risk you are willing to take.

Divide your financial goals into three groups: long-term, medium-term, and short-term. This can help you choose the best investment plans for your portfolio.

By doing this, you’ll get an idea of how much time you have to reach your goal. After that, you can choose from the options based on how willing you are to take risks.

This blog will talk about some of the most popular long-term, medium-term, and short-term investment options in India. More importantly, we will show you how to combine different kinds of investments to make the best plan for yourself.

Best Investment Options For Long-Term

Long-term goals are things you want to do in the next seven to ten years. So, if you’re looking for the best long-term investment plans, you might choose the ones that are volatile but have a chance of giving you high returns over time.

So, you need to figure out how much risk you can handle and choose your investment options based on that. Let’s take a look at some of the long-term investment options that might fit your goals, as well as the risks and returns that come with them.

Direct Equity

Investing in stocks is one of the best ways to make money for your long-term goals. Many stocks have helped investors get richer over time.

For example, in the last 15 years, the Indian non-banking financial company Bajaj Finance has made an annualized return of more than 41%. This is one of the best Investment options in India.

To give you an idea of how much this return is, if you had put Rs. 10,000 into Bajaj Finance in January 2007, you would have had more than Rs. 18 lahks in January 2023. It means that your money would have grown 180 times faster than it did.

A lot of stocks like Bajaj Finance have made investors a lot of money. But there are also a lot of companies that turned out to be bad for your money.

Take the company Reliance Communications as an example. Since its highest point in January 2008, its stock prices have dropped by 98–99%. And people who bought these stocks saw their money go down.

To sum up, stocks have a huge chance of making you a lot of money in the long run, but they also come with a lot of risks.

You can buy shares of a company directly. But finding the right stocks is the real challenge. And since more than 5,000 stocks are listed on Indian Stock Exchanges, it is not easy to choose the right ones.

Equity Mutual Funds

One way to make it less likely that you’ll lose money is to get help from a professional and invest in more than one stock. Equity mutual funds come into play at this point.

Stocks are the main thing that equity mutual funds Investments in India. But they don’t put all of your money in one or two stocks.

With these funds, your money is spread out over many different stocks. More importantly, these funds are run by people who know what they are doing.

So, they don’t invest your money until they’ve done enough research. It makes it more likely that you’ll get good returns in the long run.

Real Estate

It is one of the most popular ways for Indians to put their money to work. Still, real estate investments have given amazing returns in the past, but they also come with their own risks and limits.

One of the biggest risks of real estate is that you might not be able to sell it quickly. And if you are in a hurry to sell the house, you may have to sell it at a very low price.

Also, you will have to sell the whole property to get the money you need, even if it is less than what you need.

Gold

Since the beginning of time, gold has been a sign of wealth. Even now, it still looks good as a way to beat inflation with an investment.

In the past, the only way to buy gold was in the form of gold bars. But it has some limits, like extra costs for making or designing it or for storing it.

You can get around these problems by buying gold through Mutual Funds and ETFs. We have a blog that talks about the different ways to invest in gold in India. Read it to find out which one suits you best.

In terms of long-term returns, gold hasn’t been as good as stocks in the past.

Still, the price of gold tends to go up when people are looking for safe investments during a crisis. So they are a good way to protect yourself from inflation or stocks.

Small Saving Schemes Like PPF

Many small savings plans have been set up by the government for people who want to invest in very safe ways.

These plans give investors returns that are guaranteed and don’t change much. But you get less money back than with products that are tied to the market, like NPS, Mutual Funds, or stocks.

Still, small savings plans usually beat inflation and fixed deposits by a good amount. Investment plans like the Public Provident Fund (PPF), the Senior Citizens Savings Scheme (SCSS), the Sukanya Samriddhi Scheme, and the Kisan Vikas Patra are examples of small savings plans for the long term.

NPS

The National Pension System (NPS) is an investment product for saving for retirement over the long term. It is a mix of different assets like stocks, government bonds, and corporate bonds.

Depending on how much risk you are willing to take, you can choose how much of your money to invest in different types of assets.

ULIPs

A Unit-Linked Insurance Plan (ULIP) combines life insurance and investments. Part of your premium is put into asset classes like stocks and bonds to make you rich over time. Your premium also helps pay for a life insurance policy.

In the past, ULIPs were known for having high fees. But the fees for new ULIPs are not that high. But they still have a 5-year contract. Read our blog post, “Mutual Funds vs. ULIPs,” to find out which option is best for you.

Best Investment Plans For Medium Term

Medium-term goals are those that will be reached in 3 to 5 years. For example, a medium-term goal could be to save money for your wedding, put down money on a house, fix up your house, etc.

For these kinds of short- to medium-term financial goals, you need investments that can beat inflation by a good amount and aren’t too risky. Here are some ways to invest that can help you reach your financial goals in the next five to ten years.

National Savings Certificates (NSC)

National Savings Certificate, or NSC, is a way to save money at the post office that the Indian government backs. It works the same as a 5-year FD.

So, your NSC deposits will be paid off in 5 years, and you’ll earn 7% interest each year. But the whole amount is only paid back when the bond matures.

So, if you have a goal that you want to reach in five years, NSC is one of the safer ways to invest. But it has some restrictions, such as a 5-year lock-in period and lower returns than Debt Funds or Hybrid Funds.

Post Office Time Deposit

Post offices offer FDs just like banks do. These kinds of investments are called National Savings Time Deposits, and you can put your money in them for short to medium periods of time.

The benefit of National Savings Time Deposits is that they give better returns than banks. And there is no extra risk because the government of India is behind these plans.

Debt Funds for Medium Term

There are up to 16 different kinds of Debt Funds. All of these types of debt funds are different in terms of how much risk they are willing to take and how much money they hope to make back.

So, to choose the right Debt Fund for you, you need to be sure about your goals.

For a medium-term goal, there are three types of Debt Mutual Funds that find the right balance between risk and return.

The Banking & PSU Fund, the Corporate Bond Fund, and the Short Duration Fund are the three types of Debt Mutual Funds. Read our blog post, “The Best Debt Mutual Funds for 3 Years,” to learn why these three types of Debt Funds are the best for your medium-term goals.

Hybrid Funds

Hybrid funds are mutual funds that put their money into more than one type of asset. Equity and Debt are the most common types of assets that these funds use together.

But some Hybrid Funds also put money into Gold or even Real Estate. With these funds, you can get both the growth potential of stocks and the stability of bonds in a single fund. Our page Hybrid Funds has more information about these funds.

The best ways to invest in the short term

When looking for the best short-term investment plans, you need to think about two important things. First, you need to reduce the risk to the money you invest as much as possible.

Second, your investments should be easy to get to. Let’s look at the kinds of investments that can help us reach these two goals.

Fixed-Deposit Banks (FDs)

This is one of the most popular ways to invest in India because it guarantees a return. It’s easy to understand how FDs work. You put your money in the bank, which guarantees that you’ll get a certain amount back at the end of the term.

Even though FDs are one of the safest ways to invest, they have some major drawbacks. After taxes, the returns on FDs are just barely higher than inflation.

It means that if you invest in FDs, you are basically making a loss and your wealth is going down over time. Also, FDs charge a fee if you take your money out of them before they mature. So the fact that FDs are hard to sell is also a big problem.

Debt Funds For Short-Term

The three types of Debt Funds that work well for short-term investments are Liquid Funds for Short-Term, Ultra-Short Duration Funds, and Money Market Funds.

These items have a very low risk. And they make it easier to invest than traditional products like fixed deposits (FDs). Our blog, Best Types of Mutual Funds for Short-Term Investments, has more information about these three groups.