Crypto Investing
4 Nov 2020

Best Short Term Investment Plans In India In 2020

Nisha Ramesh

As we grow older, we start dreaming of buying more things. Some of us may want to buy a car while others dream of an international trip.

No matter what the dream is, only when we have enough savings, we can fulfil those dreams. But do you think just savings are enough? 

Let us assume you want to visit Paris in two years and save up to ₹5,000 each month. Even if you do so religiously, there are fewer chances that you have enough for the trip.

Question is:

What else can you do to make that dream come true?

Well, your answer is to invest in Short term investments. 

Short term investments are temporary investments that can be converted to cash easily in a short period. These investments typically range from 3 months to 2 years.

Why Consider Short Term Investment Plans? 

There are three advantages to investing in the short term:

  • Flexibility – You need not wait for a long time to realize your immediate goals.
  • Liquidity – These investments can be converted into cash easily in a short period.
  • High returns – You can realize substantial profits in a few years

Short term investments are also immune to interest rate risks as interest rates do not fluctuate highly within a short frame. 

So where can you invest to earn returns in the short term? 

Here, is a list of some of the best short term investment plans available in India for you to try.

#1. Try Cryptocurrencies [NEW]

Cryptocurrencies are digital currencies like bitcoins that were introduced a decade ago. Although Bitcoin was the first of its kind, we can find thousands of cryptocurrencies in the market today. 

The cryptocurrency market is known to be highly volatile – meaning, the prices of the currencies increase and decrease every minute.

Here is an example:

The price of a bitcoin was around $9500 during June 2020. Currently, one bitcoin is valued at $13,801 at the time of writing this in November 2020

That’s an increase of ~$4000 in the value of bitcoin within six months. 

Also, you can convert cryptocurrencies into cash very quickly. Unlike other investment options, you are not required to hold it for a fixed period and can convert it into fiat currency when you want to make a profit. 

Platforms like CoinSwitch Kuber make it easier for you to buy and sell cryptocurrencies. All you need to do is download the app, complete the KYC, and be ready to invest in less than 7 minutes. 

Invest In Crypto With Just Rs.100

#2. Invest In Direct Equity [IPO]

Investing in IPO’s or initial public offering is another high return short term investment strategy.

But what is an IPO?

Some large and well established private companies are allowed to make an initial offering of their shares to the public through investment banks before getting actually listed on NSE or BSE. This is done to raise capital from the masses.

Simply put:

When an existing company goes public, potential investors are provided with more information about the parent company. More information is an advantage for investors to seize good opportunities. 

IPO’s are known to be volatile on an opening day enabling you to gain in the short term. 

For example, The investors who invested in the IRCTC IPO listing doubled their money in a single day. And gained ~101% premium on the issue price in a short span of time.

#3. Ultra Short Term Mutual Funds [UST Mutual funds ]

Mutual funds are a pool of investments which are further invested in securities such as stocks or bonds.

Ultra short term mutual funds are investment schemes offered by AMC’s (Asset Management Companies) with a maturity period between 3-6 months.

These funds invest in instruments that generate fixed income and mature in a short period. They are known to generate higher returns even when the interest rates are falling. 

UST Mutual funds are ideal if you are looking to park your money for a short term to earn higher returns.

However, you need to be careful when choosing the fund since they can turn out to be risky if invested in underperforming instruments.

#4. Check Out Peer-Peer Lending

P2P lending is an old concept that has taken a new form.

It is similar to lending money to friends and relatives. The difference here is that you can lend your money to strangers through peer-peer lending platforms and earn monthly interest on the loan amount. 

Borrowers who require money for a short term take a loan from you on an agreed rate of interest.

They may repay this amount within 3-12 months, depending on the terms of the agreement. The interest rates are between 15%-20%, which is much higher than a fixed deposit interest rate, which falls between 5%-8%.

However, these investments come with the risk of recovering your capital. If the borrower fails to repay the principal amount, it may lead to complications, so do your own research before opting for this.

#5 Secured Non-Convertible Debentures

Companies offer Non-convertible debentures to raise money from the public.

Debentures are nothing but loans offered by companies. Non-convertible means that you cannot convert these debentures into shares. If the NCDs are secured, the company is obligated to return your money even if it is broke.

In crisp words:

Secured Non-convertible Debentures are secured loans that cannot be converted into shares.

You can invest in a secured NCD for a specific period and earn a fixed interest on the investment. Usually, the interest rates offered by the companies are higher than bank rates.

Although such investments carry a considerably lower risk, the returns are comparatively lower than other high return investments. 

Bottom Line

In short:

For anyone who aims to accomplish your immediate goals, short term investments can be a successful strategy.

I have given you the gist of some of the popular short-term investment options in India, but these are in no way investment advice.

However, it would be best if you be careful while choosing the investment option depending on your risk-taking capacity.

If you decide to invest in high-risk instruments, you can enjoy many-fold returns over a short period. But make sure to minimize your exposure to risk by doing thorough research on the investment vehicle before you take a plunge. 

So, shall we meet in Paris in a couple of months or years 🙂 , when you would have amassed some capital through some of your intelligent short term investments?

[su_note] KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing. [/su_note]

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

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Nisha Ramesh

Content Writer

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