Earlier, we saw some of the best investment plans in India for five years. In this article, we will learn about some of the best investment plans in India for one year.
The investment options for periods as small as 1 year are largely restricted, mainly because the equity exposure has to be reduced considerably because of the volatility factor.
Given the short duration, choosing an investment with no risk is preferable. Here are some options to invest in.
Best investment plans in India for one year
1. Debt funds
A debt fund is a mutual fund, an exchange-traded fund (ETF), or any other pooled investment product with fixed-income securities as the majority of the underlying investments.
Because debt funds have lower managing costs, their fees are lower than equity funds. Debt fund investors have the option to choose between passive and active products.
Debt funds are often known as credit funds or fixed-income funds. Investors seeking to conserve their capital and achieve low-risk income frequently invest in these funds.
Debt funds invest in a wide range of securities, each with its own set of risks the safest is the debt of the United States. Companies with a steady outlook and high credit quality issue investment-grade debt.
High-yield debt, which lowers credit-quality enterprises mainly issues with good growth prospects, delivers higher returns but also carries a higher risk profile.
Debt funds are appropriate for people with short to medium-term investment horizons, where “short-term” refers to a period of 3 months to one year (this is the period we are talking about in this article) and “medium-term” refers to a period of 3 to 5 years.
2. Short-term funds
These are open-ended mutual funds with a maturity duration of 15 to 91 days depending upon the underlying instruments’ maturity period.
These funds primarily invest in high-quality, low-risk assets. Liquid funds are an amazing choice for risk-averse investors and a great way to park your surplus money.
If you have a longer time horizon, say 2 to 4 months, you can invest in ultra-short-term funds. Short-term funds give higher returns than bank deposits, along with the provision of liquidity.
Returns on these funds have historically ranged between 6 to 8%.
3. Low-risk funds
Low-risk mutual funds are those funds that have a small number of risk elements. These funds have a greater return guarantee since they primarily invest in government bonds for infrastructure, real estate, and other uses.
The low-risk investment portfolios of these funds ensure that the inflation rate is taken care of. The investment horizon is short because these funds invest many of their assets in debt securities.
Investors wishing to put their money in tax-efficient schemes other than fixed deposits can choose low-risk mutual funds.
4. Money market instruments
For the short term, money market instruments are great investment options. The main feature of these kinds of securities is that they can be converted to cash with ease, thereby preserving the cash requirements of an investor.
Trading of money market instruments is through certified brokers or a money market mutual fund. Some funds aim to keep their portfolio as diverse as possible via a good combination of various money market products to maximize the yield.
Some money market instruments are treasury bills, certificates of deposit, commercial paper, and banker’s acceptance.
Some funds available in India
1. ICICI Prudential Medium Term Bond Fund – Direct Plan
The plan aims to maximize income while preserving the best possible return of yield, safety, and liquidity by investing in various debt and money market securities with varying maturities.
2. Nippon India Short-Term Fund – Direct Plan
The fund invests in debt and money market instruments to shell out reliable returns for clients with a short investment horizon.
3. Aditya Birla Sun Life Low Duration Fund – Direct Plan
Seeks to invest in high credit quality debt and money market instruments of short maturities.
4. Tata Money Market Fund – Direct Plan
Investors looking for a safer alternative to liquid funds can invest in this fund. It has a moderate risk profile and invests in short-term money market instruments.
5. Aditya Birla Sun Life Corporate Bond Fund – Direct Plan
The scheme’s investment goal is to create optimal returns while maintaining high liquidity by actively managing the portfolio and investing in high-quality debt and money market instruments.
6. ICICI Prudential All Seasons Bond Fund – Direct Plan
Invests in various debt and money market securities with different maturities to achieve a balance of return and safety.
FAQs
Which SIP is best for 1 year?
- Debt funds
- Short-term funds
- Low-risk funds
How can I grow my money in one year?
There are many ways to grow and invest your money for one year. You can consider the following types of investments:
- Debt funds
- Short-term funds
- Low-risk funds
- Money market instruments
Can I withdraw SIP anytime?
Yes, investors can withdraw the amount or stop their SIP whenever they want.
Does SIP have risk?
Yes, investing in mutual funds via SIP does involve some level of market risk. Risk differs based on the type of investment.
