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Investing is one of the best options to increase hard earned money within a stipulated time. Investing money helps a person achieve financial goals easily. An investment helps improve financial status and secure your future. If you are not looking for long term investments, then stick to 3 year investment schemes that give good returns in a short time.
Best Investment Plan For 3 years
Financial planning is the process of creating a proper financial plan to meet investment goals, within a specific time frame. Financial planning helps secure your future as well as build wealth. A good financial plan always helps you err on the side of caution and cover all financial liabilities. Given below are the benefits of having a sound financial plan:
- Manage income/finances effectively by diversifying investments.
- Invest in avenues that generate more income in lesser time.
- Discarding liabilities and paying debts
- Creating emergency savings
- Creating savings for fulfilling life goals
- Prioritizing expenses and checking your assets.
Given below are some of the best short term investment options that would help you earn good returns without having to lock your money for long periods of time:
Savings Bank Accounts:
A savings bank account is a deposit account opened by an individual at a bank or any other financial institution that provides a modest interest rate usually 3.5-4% a year.
The savings bank accounts helps investors set aside a portion of their income, on which they earn interest. The funds deposited in the savings account remains accessible to the customer as he can withdraw the funds whenever needed. The savings bank account has low risk.
Liquid fund is a type of debt mutual fund. These schemes are generally open-ended and are for short term investments. The liquid funds invest in money market instruments like certificates of deposit, treasury bills and commercial paper of maturity up to 91 days.
The investor can choose to invest for a few days or months as liquid funds are available in variants like daily/weekly and monthly options. The liquid funds help the investor earn money within a short period of time. On an average the returns generated by liquid funds are 7-8% a year and higher than savings bank accounts.
A fixed deposit is a financial instrument that enables customers save money in a bank or NBFC, which gives a higher rate of return than a savings bank account, (around 7% a year). Fixed deposits are one of the safest investments around. Fixed deposits are unaffected by market conditions. Fixed deposits offer liquidity (can be withdrawn with a small penalty) and offer decent returns.
Fixed maturity plans:
Fixed maturity plans (FMP) are debt funds that invest in company debt, money market instruments, fixed deposits and government securities. These are also close-ended debt mutual funds with maturity extending to around five years.
Fixed maturity plans invest in fixed income generating instruments like certificate of deposits or bonds and have a pre-defined tenure. The tenure of fixed maturity plans generally ranges from 30 days to 5 years. Invest in FMP with tenure in-line with financial goals.
Treasury Bills are short term (up to one year) borrowing instruments of the Government of India, which enable investors to park their short-term surplus funds while reducing market risk. They are auctioned by Reserve Bank of India at regular intervals and issued at a discount to face value.
Treasury bills are the money market instruments that are issued for shorter tenure and are one of the best short term investment options, around. Treasury bills offer good returns on maturity.
Post office time deposits:
Post Office Time Deposits offers the facility of investing surplus funds at relatively higher rates of interest. These are one of the best investment options for a period of 5 years and are also eligible for tax benefits under Section 80C of Income Tax Act.
You can open a post office account either individually or in joint name and the interest on these deposits are calculated on quarterly compounding basis and payable annually. The current rate of interest of a 3 year post office time deposit is 7%.