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10 Best Short-Term Investment Plans with High Returns in India 2023

Updated On Aug 22, 2023

Short-term investments, also known as temporary investments, can be converted to cash quickly, typically within 5 years. These investments include highly liquid assets or marketable securities that provide a safe opportunity to park your excess funds. Short-term investments can be liquidated after a small period of even 3 to 12 months. Some of the popular short-term investment options are government bonds, treasury bills, high-yield savings accounts, and money market accounts, as all these are highly liquid, quality assets. It is vital to understand the features of each short-term investment option in India to ensure lucrative returns in a short time.

What are Short-term Investments?

Short-term investments are designed to serve the immediate financial needs of investors. These investments provide a considerable amount of return in a short span of time, which can be a few months or a year. Investors who choose to invest in short-term investments are typically those who are not looking to wait for years to get their funds multiplied. Short-term investments serve their purpose of quick and effective returns.

Short term investment plans

While investors of short-term investments do not get massive amounts of returns when compared to long-term ones, it will be optimal enough to meet their immediate financial goals. Short-term investments have low risk and rank high in the popularity scale amongst seasoned investors.

Short-term investment plans can be easily liquidated, and their period ranges between 1 day to 5 years. Short-term investment plans are low-risk and involve trustworthy financial instruments such as fixed deposits, post office deposits and large-cap mutual funds. They have a premature withdrawal facility and are ideal if you wish to secure your wealth for a short or an unknown period. Features of short-term investments are:

  1. No definitive maturity periods
  2. Low but steady return on investment
  3. Low investment risk
  4. No lock-in period for partial or complete withdrawals

Ten Best Short-term Investment Plans with High Returns

  • Recurring Deposits

Recurring deposits are an ideal short-term investment option to earn a good return on investment along with high interest. In this scheme, investors can earn a fixed interest amount till policy maturity. While opening a recurring deposit account, you must mention the tenure of the RD and the money you would save each month. Features of RD are:

  1. It offers an interest rate of 4% - 6%
  2. The minimum deposit amount is Rs.1000, and there is no maximum limit
  3. The maturity period is between 6 months and 10 years
  4. The RD interest earning is taxable
  5. Funds can be transferred from an RD account to a Savings account
  • Fixed Deposits

Fixed deposits are one of the safest short-term investment options available in India. Fixed deposits offer a guaranteed return on investment and a higher rate of interest when compared to RD. Once the FD matures after its term, you can withdraw your money, but FD does not allow early withdrawal before maturity. Features of FD are:

  1. Tenure for FD can range between 7 days to 10 years
  2. The rate of return is between 2.5% and 5.5% per annum
  3. The FD interest amount is taxable
  4. It is a simple, fixed-return investment
  • National Savings Certificate

National Savings Certificate, or NSC, is a tax-saving, low-risk, short-term investment scheme that can be taken from post offices across the country. This savings plan is approved by the Government of India and assures a fixed return on the investment. While the current interest rate is 6.8%, it can vary depending on the government rules. Features of NSC are:

  1. The minimum investment amount is Rs.1000, and no maximum limit
  2. Lock in period is 5 years
  3. The interest rate is 6.8%
  4. Tax benefits up to 1.5 lakhs as per Section 80C of the Income Tax Act
  5. Premature withdrawal allowed in certain cases only
  • Debt Instruments

Debt instruments are one of the ideal choices for short-term investment as they are both liquid funds and offer good returns. You can choose to invest in corporate bonds, government securities and money market instruments. Since these investments are debt-oriented, they are not impacted by market fluctuations and are ideal for investors who are looking for predictable returns. Features of debt mutual funds are:

  1. The interest rate is between 8% and 11%
  2. Plan duration is between 6 months and 3 years
  3. Need to invest for more than 3 years to avail long-term capital gain
  • Post Office Monthly Scheme

Post office fixed deposits or post office time deposits are one of the best and safest short-term investment plans that offer guaranteed returns to investors. This scheme is offered by India Post and is available even to the country's remote areas. Features of the Post office savings scheme are:

  1. You can choose an investment tenure of either 1, 2, 3 or 5 years
  2. Interest rates are 5.5% for 1, 2 or 3 years and 6.7% for 5 years
  3. Interest is applied annually on the deposited amount 
  4. The post office scheme does not allow withdrawal before 1 year from the application date
  5. Premature withdrawals are charged 1 to 2% as a penalty 
  6. Funds can be re-invested after 5 years after maturity
  • Large Cap Mutual Funds

In large-cap mutual funds, money is invested in stocks and shares of large businesses to gain significant returns in a short span. These are lucrative short-term investment options that can give smart and quick returns within 1 to 3 years of the investment period. The features of large-cap mutual funds are:

  1. One can invest in large-cap mutual funds for a period of 3 to 5 years
  2. Along with high returns on investment, large-cap mutual funds also offer high liquidity
  3. Since it is a short-term investment option, the risk is low, and the return is high, i.e., 8% to 13%.
  4. Capital gain tax is levied on the gains earned from large-cap mutual funds.
  • Money Market Account

Also known as liquid funds, money market investments are designed to give you high returns along with the security of capital. They do not have a lock-in period, offer high liquidity and are the least risky among mutual funds. 

  1. A money market account has a maturity time limit of 91 days
  2. One can open a money market account for a tenure lower than 13 months
  3. This investment can be redeemed quickly and offers high liquidity
  4. The returns on money market investment are not fixed, and the current rate is 7%.
  5. The gains on this investment before 36 months are added to the income of the individual and taxed. 
  6. The profit earned post 36 months of investment tenure is taxed at 20% after indexation.
  • Corporate Deposits

A corporate or company deposit can fetch the investor high returns while providing capital protection. With a lucrative interest rate between 9% and 12%, a corporate deposit investment is one of the best short-term investment options. Companies utilise corporate deposits for expansion and operations. Features of corporate deposit investments are:

  1. The default risk is higher in corporate deposits
  2. The rate of interest is between 6% and 8%
  3. The duration of the scheme is between 1 and 3 years
  4. The maturity period is 5 years
  5. Interest earned from corporate deposits is taxable based on the IT slab
  • Gold or Silver

Gold or silver are a safe and reliable investment for both the short and long term. Since the prices of these valuable metals rise on a daily basis, they are bound to give you huge returns whenever you decide to sell them. They are secure and risk-free short-term investment options. Features of gold and silver investments are:

  1. Highly flexible to be used for both short-term and long-term purposes
  2. Can fetch high returns as the cost prices of gold and silver rise significantly over a period

How to Choose a Short-term Investment Plan?

There is a plethora of short-term investment options in the market. Depending upon your needs, you must compare and choose the right plan to gain the maximum benefit. Some factors you must consider before making a choice are:

  • Investment objectives
  • Risk tolerance
  • Liquidity requirements
  • Investment horizon
  • Inflation
  • Fees and charges
  • Tax implications


We discussed above the top short-term investment options in India. These investments are profitable as they fetch good returns in a short time, enabling the investor to fulfil his immediate financial obligations. Investors can use the short-term investment options available in India to invest wisely and enjoy fixed, reliable returns.


  • Which short-term investment yields the highest return?

Large-cap mutual funds yield the highest rate of return.

  • What is the minimum period of a short-term investment?

Short-term investments can be made for 1 year or even less.

  • What are the benefits of short-term investments?
  1. High liquidity
  2. High flexibility
  3. Transparency
  4. Minimum duration
  • Are short-term investments considered assets?

Yes, short-term investments are considered as assets irrespective of whether you invest for a month or a year.

  • What are the best short-term investment options for the middle-class Indian population?

Fixed deposits, recurring deposits, NSC, and liquid mutual funds are some of the ideal choices for short-term investment for the middle class.  


This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.