10 Short Term Investments For Young Investors
Broadly classified, there are two stages in a person’s economic lifespan - the accumulation stage and the distribution stage.
The accumulation stage is the stage when a person earns money and has an active income. This sage usually starts with a person’s first job and lasts till retirement, after which the distribution stage
On the basis of wealth created through the accumulation stage, a person fulfills his desires and gives himself a lifestyle. Millennials often love to lead a luxurious lifestyle through which they can fulfill their desires such as owning expensive cars, planning foreign trips etc. However, such expenses often cannot be borne in one go.
If you are in the accumulation stage of your life and have a lavish lifestyle which involves such discretionary expenses, then you might be in need of saving up your paychecks to fulfill these dreams
A sound and efficient investment plan can help a great deal in fulfilling these dreams, as it can give your saving the additional boost of interest and potential returns which can help you easily achieve your short term financial goal.
The financial investment space has developed to such an extent today, that short term investments can be done by anyone within a very short time and through a few taps on the phone
Let’s look at some of the short term investment plans for youngsters which can help in achieve the desired financial goal easily.
10 Short Term Investments For Young Investors
- Investing in Liquid Funds or Money Market
- Bank FDs
- Recurring Deposits
- Post Office Savings Scheme
- Peer to Peer Lending
- Certificates of Deposits
- Stock Market Investment Through Technical Strategy
- Index Futures based Investments
- Gold based Short Term Investment Strategy
- Event based Short Term Investment in Stock Markets
1. Investing in Liquid Funds or Money Market
Liquid funds are debt mutual funds which invest in debt schemes for a very short period – upto 91 days. These are often preferred by investors who do not wish to lock in their money in long term funds as the liquid funds do not have a lock in period.
2. Bank FDs
This is the safest option for short term investments in India, if you wish to earn interests in the range of 7-9 percent. Bank FDs come with tenure of as low as 7 days to as high as 10 years. These short term instruments can also be liquidated at any time after an initial lock in period and can also be extended for reinvestments on maturity.
3. Recurring Deposits
These are another very famous short term investment instruments in which a fixed amount is deducted from your account every month and is deposited in the RD account on which interest is generated. This interest is often higher than the interest earned in regular savings account and also offers liquidity. The shortest time duration for which you can open an RD is 6 months, followed by 9 months, 12 months etc. upto 10 years.
4. Post Office Savings Scheme
Just like bank FDs, post office also offers fixed deposits with it where investors can park their money for a period of 1 to 5 years and can generate a decent return. Similarly National Savings Certificate issued by the post office can also be purchased.
5. Peer to Peer Lending
This is one of the lesser popular ways of short term investment as the money you are investing is basically loaned to different players byP2P lending platforms and owes a default risk. However, if don with trustworthy partners, it can generate goof returns for you over a shorter duration
6. Certificates of Deposits
These types of deposits are the ones issued by companies in the money market to get cash for their day to day expenses. As a part of the unorganized sectors, these are highly liquid and offer fixed interest rates, hence can be good for earning a nominal interest over the saved amount.
7. Stock Market Investment Through Technical Strategy
For young investors who want to passively invest their money in the stock market for holding period of more than a week, the technical analysis and machine learning based stock market trading strategy - Infinity – can help in achieving short term investment goals. This strategy invests in cash segment stocks and this is good for passive investors who wish to hold the stocks for a longer period of time than one week
8. Index Futures based Investments
If direct trading in specific stocks seems risky to you and you would rather invest your money in index funds, then the quantitative analysis based short term investment strategy – Prime Nifty Bank may be best suited for you. Prime Nifty Bank is for short term traders who are exclusively interested in trading in Nifty Bank futures, this quantitative analysis driver strategy can be useful. 1-2 recommendations are given each month along with a stop-loss.
9. Gold based Short Term Investment Strategy
If you are skeptical and doubtful about the equity markets in general and want to invest in safe haven of goals, but to earn better returns than directly buying the metal, then Prime Gold strategy by CapitalVia would be best suited for you. This quantitative analysis backed strategy gives 1-2 recommendation in a month for Gold commodity futures and is best suited for swing traders.
10. Event based Short Term Investment in Stock Markets
If you believe more in fundamental analysis than technical analysis and believe in longer term investment than just one week or a month, then a thematic investment strategy based on a particular event affecting in the stock markets can pay off decent returns, such as a shot term strategy taking benefit of impact of monsoons on stock markets or the union budget on the markets etc.
Final Thoughts
Out of all these strategies, some form a part f the organized financial markets – which is the stock market, currency market and commodity market, whereas some belong to the lesser organized sector such as the treasury bills market, deposits certificates markets. The schemes such as Bank FDs, RDs, Post office schemes etc. are covered under the RBI’s purview. As a young investor you should look at all aspects involved in an investment including the term, the risk involved, the returns, the previous record of the issuer company and only after that should you choose to invest your money in the short term investment options.
Author
CapitalVia
Pioneer in Investment Advisor
