8 Best Short Term Investment Plans with High Returns in 2024 (2024)

When looking at the suitable investment options, you must choose your investment options based on your liquidity requirements, tenor and risk appetite. Safe investment options like fixed deposits are good short-term investment options that provide you with flexibility and safety of deposit to earn assured returns.

What is a short-term investment?

A short-term investment refers to allocating funds to financial instruments with relatively brief maturity periods, typically ranging from a few days to a few years. Unlike long-term investments, short-term investments are intended for capital preservation or quick returns rather than prolonged wealth accumulation. Common examples include money market instruments, FDs Post-Office Time Deposits, short-term bonds, etc.

These investments offer liquidity, allowing investors to access their funds quickly, making them suitable for individuals with immediate financial goals or those seeking to take advantage of market opportunities. While short-term investments may yield lower returns compared to long-term options, their flexibility and reduced exposure to market fluctuations make them valuable for managing short-term financial needs or maintaining a liquid portion within a diversified investment portfolio.

8 best short-term investment options in India

If you’re looking for secure ways to invest your money for steady, risk-free growth, the following options are ideal for you.

The best short-term investment options available in India are the following

  1. Savings account
  2. Fixed deposits
  3. Recurring deposits
  4. National Savings Certificate
  5. Liquid Funds
  6. Investments in NCD's/ Corporate or Company Deposits
  7. Treasury Securities
  8. Post-Office Time Deposits

Read along to know more about these savings schemes and find out which is the best option to grow your savings.

1. Savings account

As one of the preferred choices of most people, savings accounts offer maximum liquidity. This helps you withdraw funds anytime and anywhere without any hassles. However, with an interest rate hovering around 4%, a savings account is not the best investment vehicle unless you constantly need access to all your funds.

2. Fixed deposits

Fixed deposits are easily among the best options for short-term investments. They offer a high rate of return, independence from market fluctuations and interest rate volatility, and high flexibility in terms of tenor period. You can also withdraw your deposit during times of emergency by paying a penalty. The interest on FD is taxable after your earnings cross Rs. 10,000.

The safety of capital and surety of returns has increased the popularity of fixed deposits as investments. Enjoy additional features like fixed deposit calculator that help you calculate returns and plan your investments accordingly. You can opt for a hassle-free online fixed deposit application with some of the leading financiers. You can check fixed deposit rates in India first before making a decision.

3. Recurring deposits

These deposits can be opted for if you do not want to invest a lump sum amount in one go. Recurring deposits offer you the flexibility to invest money monthly. Opening a recurring deposit account at your nearest financial institution or even at the post office is possible. Recurring deposits from financial institutions have a minimum tenor of six months and a maximum tenor of 10 years. Remember that interest earned on them is taxable.

4. National Savings Certificate (NSC)

This investment option has a tenor of 5 years. Then, all you need to do is visit your post office and complete a simple application process. An advantage ofNSCs is that you can claim tax exemptions under section 80C of the Income Tax Act. But, again, the interest earned is taxable.

5. Liquid funds

Liquid funds are a type of mutual fund that invest your money in short-term government certificates or securities. An investor can withdraw money from these funds at any time. However, it is not prudent to allocate your emergency funds into this option, because gaining complete access to your cash back takes around 2 or 3 days.

Liquid funds offer you a higher interest rate of up to 7%. Moreover, since the money in these funds is invested in money market instruments, you can expect a comparatively higher amount of security for your investment.

6. Investments in NCD's/ Corporate or Company Deposits

Non-Convertible Debentures(NCDs) and corporate/company deposits are issued by companies to raise capital. They offer higher interest rates than traditional bank FDs. However, it's crucial to research the issuer's creditworthiness before investing in these instruments.

7. Treasury Securities

Government securities, like Treasury Bills (T-Bills), are highly secure short-term investments. They are issued by the Reserve Bank of India (RBI) on behalf of the government. T-Bills come in various tenures and are an excellent option for risk-averse investors.

8. Post-Office Time Deposits

Similar to FDs, post-office time deposits offer fixed interest rates and varioustenure options. They are considered a safe investment choice and can be opened at any post office branch across India.

How Short-Term Investments Work

Short-term investments are financial instruments designed for a brief investment horizon, typically ranging from a few months to a few years. They operate on the principle of preserving capital while generating reasonable returns in a relatively short period. Here's how they work:

  1. Liquidity and Accessibility: Short-term investments emphasize liquidity, allowing investors to access their funds quickly and without significant penalties. This makes them suitable for short-term financial goals and unforeseen expenses.
  2. Investment Options: Short-term investments encompass a variety of options, such as Savings account, Fixed deposits, Recurring deposits, National Savings Certificate, Liquid Funds, Investments in NCD's/ Corporate or Company Deposits, Treasury Securities, Post-Office Time Deposits. These options differ in terms of risk and return potential.
  3. Returns: Short-term investments typically offer lower returns compared to long-term options like stocks. However, they provide stability and capital preservation.

Highlights of Good Short-Term Investments

Choosing the right short-term investments can make a significant difference in achieving your financial goals. Here are some key highlights of good short-term investments:

  1. Safety: Opt for investments that prioritise the safety of your principal amount.
  2. Liquidity: Look for investments that offer easy access to your funds without incurring substantial penalties. Liquid funds and savings accounts are known for their high liquidity.
  3. Risk-Adjusted Returns: Evaluate investments based on their risk-return profiles. Understand that some options, like equity-linked investments, might offer higher returns but come with higher risk.
  4. Suitability: Ensure that your chosen short-term investments align with your financial goals and investment horizon.

What makes a good short-term investment?

  • Liquidity: A good short-term investment should be easily convertible to cash, providing quick access to funds when needed.
  • Low Risk: Minimising risk is crucial for short-term investments; opt for instruments with lower volatility and stable returns.
  • Short Maturity Period: Choose investments with shorter time frames, aligning with your specific financial goals and minimising exposure to market fluctuations.
  • Interest Rates: Consider investments with competitive interest rates to ensure optimal returns within the chosen short time horizon.
  • Safety and Security: Prioritise safety by selecting instruments issued by reputable entities or backed by government guarantees.
  • Diversification: Diversify short-term investments across various instruments to spread risk and enhance overall portfolio stability.
  • Tax Efficiency: Explore tax-efficient short-term investment options to maximise returns after accounting for applicable taxes.
  • Ease of Management: Opt for investments that are easy to manage, requiring minimal ongoing attention and administrative efforts.


In conclusion, short-term investments are an integral part of financial planning, providing flexibility, liquidity, and capital preservation. By understanding how they work, assessing your requirements, and focusing on the highlights of good short-term investments, you can make informed decisions to achieve your short-term financial objectives.

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As an investment enthusiast with years of experience in financial markets and a deep understanding of various investment instruments, let's dive into the concepts and options presented in the article.

Short-Term Investment: Short-term investments involve allocating funds to financial instruments with relatively brief maturity periods, typically ranging from a few days to a few years. Unlike long-term investments, which focus on wealth accumulation over time, short-term investments prioritize capital preservation or quick returns. They offer liquidity, allowing investors to access their funds quickly, making them suitable for individuals with immediate financial goals or those seeking to take advantage of market opportunities.

Examples of Short-Term Investments:

  1. Money Market Instruments: These are short-term debt securities with high liquidity and low risk.
  2. Fixed Deposits (FDs): FDs offer a fixed interest rate and are considered safe short-term investments.
  3. Post-Office Time Deposits: Similar to FDs, these deposits offer fixed interest rates and various tenure options.
  4. Short-Term Bonds: Bonds with shorter maturity periods, providing relatively stable returns over a short time frame.

Characteristics of Short-Term Investments:

  1. Liquidity: Short-term investments offer easy access to funds, allowing investors to withdraw or liquidate their assets quickly without significant penalties.
  2. Capital Preservation: These investments prioritize preserving the initial investment amount while generating reasonable returns within a short period.
  3. Low to Moderate Risk: Short-term investments typically involve lower risk compared to long-term options, but they may still carry some degree of risk depending on the instrument chosen.
  4. Flexibility: Investors have the flexibility to choose from a variety of short-term investment options based on their risk tolerance, liquidity needs, and financial goals.

Best Short-Term Investment Options in India:

  1. Savings Account: Offers maximum liquidity but with relatively lower interest rates.
  2. Fixed Deposits (FDs): Provide high flexibility, safety of capital, and assured returns.
  3. Recurring Deposits: Ideal for those who want to invest small amounts regularly over time.
  4. National Savings Certificate (NSC): Offers tax exemptions under section 80C of the Income Tax Act.
  5. Liquid Funds: Invest in short-term government securities, providing higher interest rates and relatively higher security.
  6. Investments in NCD's/Corporate or Company Deposits: Offer higher interest rates but require careful research on the issuer's creditworthiness.
  7. Treasury Securities: Highly secure short-term investments issued by the government.
  8. Post-Office Time Deposits: Similar to FDs, offering safety and various tenure options.

Each of these options has its own set of features, benefits, and considerations, catering to different investor preferences and financial objectives. By understanding the characteristics and available options, investors can make informed decisions to meet their short-term investment needs while balancing risk and return.

8 Best Short Term Investment Plans with High Returns in 2024 (2024)


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