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Where to Invest Money for Less than 1 Year?
By Anupama Deshpande | May 07, 2018

Many a time it happens that we have some funds that we do not require right now but we need them after one year. At that point of time, we get confused as to where should they be invested so that we not only earn better returns but the funds would be available to us exactly after one year from now when actually we need them.



I am listing below investment avenues available for a period of upto 1 year with their suitability and characteristics which you can find helpful in your taking decision:

Investment OptionSuitable forCharacteristics
Liquid FundsWho need pure liquidity
  • Money market investment
  • Fully liquid
  • 5% to 7% p.a. returns
  • Taxable income under growth option
Bank Savings AccountGuaranteed returns with security
  • Safest way to park money
  • Liquidity
  • 3.5% to 7% p.a. returns
  • Taxable income, if more than Rs 10,000 per year
Ultra Short Term FundSlightly more returns than liquid funds
  • Mutual Fund Scheme
  • Invests in ultra short term instruments
  • 6% to 7% p.a. returns
  • Taxable income under growth option
Short Term Mutual FundMore returns with little longer duration
  • Mutual Fund Scheme
  • Invests in short term instruments
  • 6% to 7.5% p.a. returns
  • Taxable income under growth option
Bank Fixed DepositFixed Guaranteed returns
  • FD from 15 days to 1 year
  • Guaranteed returns
  • Penalty on premature withdrawal
  • Taxable income
  • TDS deducted for income over Rs 10,000 per year
Bank Recurring DepositRegular Investment
  • RD of 1 year
  • Guaranteed returns
  • Interest earned is received on maturity
  • Taxable income
Arbitrage FundLittle risky with greater returns
  • Invest in arbitrage opportunities in the cash and derivative segments of the equity market
  • Tax efficient returns
  • 6% to 8% returns
  • Taxable income
Fixed Maturity Plan (FMP)More returns with security and less liquidity
  • Mutual Fund Scheme
  • Lock in period is applicable
  • Upto 7% p.a. returns
  • Taxable income under growth option
Post Office Time DepositFixed and secured returns
  • Invest in 1 year time deposit
  • Lock in period of 6 months
  • Guaranteed returns
  • 6.60% p.a. returns
  • Interest earned is received annually
  • Taxable income

Suggested reading 8 Little Known Facts about Education Loan

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About Anupama Deshpande
Anupama is a Co-Founder of CodeForBanks.com. She is an MBA (Finance) and Chartered Financial Analyst (CFA). She also carries a Fellowship degree in Life Insurance Sector and is a Master of Computer Application (MCA). She is an expert in Finance Field with an experience of over 18 years on different managerial positions in finance industry including Stock Market, Depository and Mutual Fund Sectors. Apart from that she has remained for few years in the field of marketing as well. Her suggestions and advice for investments have been very useful to many people.
Her vast interest & expertise in the field of finance have encouraged her to write the articles so that others can also get benefitted out of them. She never loses any opportunity to learn and be creative. She is a valuable asset for CodeForBanks.com & important resource to all those around her.

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