In short-term investment, we invest our money somewhere for a short period. Through this, we fulfill our short-term objectives. Suppose you want to invest your money somewhere for a few months or a couple of years so that you can fulfill your short-term objectives. This is called Short Term Investment.
In simple words – an investment that is made in the short term for a short period like 6 months to 1 year is called a short-term investment.
The most important thing while making short-term investments is that in India, such investments are of low risk and the returns received from them are also very low.
Investment Highlights
1. These are low-risk investments.
2. These are invested for the short term.
3. Short term: Less return is available in the short term.
4. These fulfill short-term objectives.
5. Less money is invested in the short term (Low Investment Amount).
What is Short-Term Trading?
By Short Term Trading, we mean that way of trading in the stock market, in which a trader takes trade in a stock for a few days to a few weeks. Here by trading, we mean buying and selling stocks, futures, or options.
Example-
Some examples of short-term trading are as follows-
1. One Week Trade (from two days to one week)
2. Two Week Trade (from two days to 15 days)
3. Monthly Trade, (from two days to 4 weeks i.e. 1 month)
4. Or Quarterly Trade (from two days to 12 weeks i.e. 3 months)
5. And Half Yearly (from 1 week to 6 months)
If the trade is taken in the weekly or monthly time frame mentioned above, then it is called Short Term Trading.
Short Term Trading and Swing Trading
If truth be told, short-term trading and swing trading are both similar. In both these methods, the trader takes a trade for a few days to a few weeks, and the trader tries to take a profit and make money in the short term. Taking such trades can be called Short Term Investing In Stock Market or Short Term Trading or Swing Trading.
Benefits of Short-Term Trading
Short-term trading is an active trade investment in which you keep an eye on the market and your investment and close the trade as soon as you get your target price.
If we talk about the benefits of short-term trading, then if you make disciplined investments and keep an eye on the market, by choosing good stocks keeping in mind both fundamental and technical and economy, you can earn good profits in the short term.
Short-Term Investment Options
Financial security and strength depend on how you decide to invest. Just saving money is not enough, it is also important to invest it with the right plan. If you want to invest your money for a short period, then there are many good options for you at this time.
1. Recurring Deposit
You get good interest on investment in recurring deposits. You can withdraw a lump sum amount whenever you want. It is very easy for employed people to make recurring deposits. You can open an RD account with your salary account. The bank gives interest at a fixed rate on the RD account. Along with the bank, you can also deposit a fixed amount every month in the post office. By opening an RD with a savings account, you do not need to deposit money every month as the money can be deducted directly from the account.
2. Short-term bond funds
This investment plan is for the short term and one can invest in it for one to three years. If the investor wants to invest for less than a year, short-term bond funds are right. Although this investment has both interest rate and risk, its popularity has increased a lot in recent times.
3. Fixed deposit
In fixed deposit, you have to deposit money for a fixed time and you get interest at a fixed rate on that money. Most banks and financial companies offer interest on FD at an initial rate of around 7 percent. There are investment options ranging from 7 days to 10 years. For withdrawing money before the stipulated period, some amount has to be paid as a penalty. Fixed deposits still remain a popular option among the middle-income group of India.
4. Liquid funds
Liquid funds are an excellent investment option for those expecting good returns in the short term. Liquid funds are a safe option for those who want to avoid risk in investment. Its biggest advantage is that there is no lock-in period. The rate of return in liquid funds keeps fluctuating and one can invest in it for any period from 1 week to 1 year.
Short Term and Swing Trading
If truth be told, short-term trading and swing trading are both similar. In both these methods, the trader takes a trade for a few days to a few weeks and the trader tries to take profit and make money in the short term.
Taking such trades can be called Short Term Investing In Stock Market or Short Term Trading or Swing Trading.
Short-Term Investment Scheme
Money can be invested even for a period of two or three months and returns can be earned on it. Sometimes you need to keep the money for a very the short period. If you want to invest for more than a year, then you have many options from which you can get attractive returns.
The investment options for the short term are as follows-
1. Bank FD
You can earn good returns on the fixed deposits in many banks. An investor should check whether his investment is growing faster than the inflation rate or not. The best thing about investing in bank FD is that the investor's capital is safe and the investment can be redeemed on time. In bank FD, you get returns as per the fixed interest rate annually. On completion of the investment period, the investment is returned along with interest.
2. liquid funds
Liquid funds are the top choice of youth for short term investments. These are actually debt mutual funds. It is recommended to invest in the market for short term. An Investment options include treasury bills, government the securities and call the money etc.
These funds invest in an instruments with a maturity the period of 91 days. Investors can usually invest in these funds for 1 day to 3 months. Liquid funds are also better for times when you suddenly get a large amount of money.
3. Corporate FD
Many companies offer the corporate FDs to raise capital for their the business needs. The Companies take capital from an investors for a fixed period which is called the corporate FD. For this, they invite an investors to invest by giving an advertisements. The Companies pay more interest on the corporate FD than banks and other the finance companies, because these the companies have the right to take deposits under the Company Law. An Investors decide to invest in it only because of better an interest rates.
4. Post office deposit
Any person can make this an investment by going to the post office. Here the interest rate is given on an annual basis and it is calculated every quarter. An Investment can be started here even with a very small amount.
5. Recurring Deposit (RD)
This plan, which deposits a small amount every month, is a type of term deposit. However, banks adopt different rules for this. This proves to be very helpful for people. This is a much better plan than saving for people with jobs or daily income. In this, working professionals or businessmen can earn interest by depositing money from their savings every month. In this also interest is available like FD. After depositing the money for a certain period, the entire amount along with interest is returned.
6. Sweep-in FD
If any amount remains in your bank account for a long time, the bank itself asks you to convert it into FD. This is called sweep-in FD. You can withdraw this amount whenever you want in this FD linked to your savings account. Generally, if the amount in the savings account exceeds the required amount, banks convert it into FD with the permission of the account holder. In this you get more interest than in a savings account. Many times banks give interest here also like fixed deposits.
