Short Term Investment and Long Term Investment Plans in India |
Posted: January 5, 2017 |
A Short term Investment is one where an individual invests money for a shorter period to meet his/her short term financial goals. This ‘Short Term’ can be anything between a few days to a few months – but with 3 years as the maximum limit. These investments are generally low cost which gives way for only slightly higher returns. With these investments, there is practically no risk involved. There is a kind of flexibility attached with these investments that allow an individual to withdraw his/her funds at any given time.
Below enlisted are some Short Term Investment Options:
A traditional approach that has been in practice since ages, Fixed Deposits are as popular now as they were before. When you fix a certain amount in the bank for a specific period of time, the amount will capitulate a fixed rate of interest depending upon the bank scheme and duration of that deposit. Banks, as a rule, provide higher interest rates than regular saving accounts. Do note that only long term fixed deposits are eligible for tax deductions, which by rule means that the short term deposits are not.
Another way to meet one’s short term goals is to invest in Fixed Maturity Plans, which are essentially debt funds that invest in government bonds, treasury bills, certificate of deposits and more such that have a maturity period of 2 years. These plans involved low to no risk with the only drawback being that one cannot withdraw the amount invested before the maturity period comes to a close. On the brighter side, Fixed Maturity Plans are more tax efficient than Fixed Deposits.
A Long term Investment is one where an individual invests your money for a comparatively longer period of time to meet his/her financial goals. These investments tend to extend beyond 3 years, but mostly, the ones that go beyond 10 years are considered really to be long term. An invidual’s long term financial goals are usually the education and marriage of one’s children or planning his/her retirement.
Below enlisted are some Long Term Investment Plans:
Public Provident Fund is a very common form of long term investment these days owing to the fact that it is a safe as well as a tax efficient option. There is practically no risk involved with the PPF and it also assures fixed returns at the time of policy maturity. The factors that contribute majorly to its popularity are the fact that the Deposit amount is exempt from taxation under the section 80 C of The Income Tax Act, the interest earned on the returns is also tax free and so is the amount that is remunerated on the maturity of the policy.
Everyone dreams of the day they can finally build their dream home. In this day and age, Real Estate has become an exceedingly profitable investment option. This option is also prone to fraud and therefore, calls for one to be cautious while making a decision as this is a large partaking with a much higher risk involved. Patience will be a virtue as one has to deal with the fluctuating prices in the real estate sector. As mentioned already, an investment in real estate involves large sum of money, and therefore, one needs to plan things in a systematic manner in order to enjoy good returns. Do not expect immediate returns and be informed to every inch of detail before making an investment. If you make the right decision, this is the most profitable option that would bear only sweeter fruits in the long run.
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