While investing or saving, we have always come across one thing, “Be prepared for long-term goals”. We are always advised to save early to fulfill our long-term goals, objectives, and dreams.
But, what about the short-term goals? What about an emergency corpus? How do you pay for or fulfill your immediate monetary requirements?
The answer to all the above goals is answered in this article!
What are short-term goals?
Short term goals are something you want to do in the near future which can be today, this week, this month, this year, or even within two years.
Some examples of short-term goals in investment are:
- Paying for your child’s school fees every year.
- Purchasing a smartphone.
- Purchasing a laptop.
- Purchasing jewelry for an occasion, etc.
Short-term goals are characterized in the following ways:
- They’re specific.
- They’re measurable
- They’re achievable
- They’re relevant
- They’re time-bound
How can you save for short-term goals?
There are two main ways of saving for short-term goals with very low-risk levels.
- Savings account: Keeping money or maintaining some cash balance in your savings accounts is one of the ways for achieving your short-term goals. But one main drawback of this method is that the interest on savings accounts is not at par with the inflation rate. This may cause you to lose money over time.
- Mutual funds: For short-term goals debt funds are the best option. Based on the investor’s time horizon and risk appetite there are also various subcategories in debt funds for investors to choose from. These funds generate returns that are at par with inflation.
Best debt mutual funds for short-term goals
Now that we know what investment mode to choose, let’s look at some debt funds that are performing well.
| Fund name | Annualized Returns (1yr) (%) | Annualized returns (3yrs) (%) |
| Short Term Fund | ||
| Aditya Birla Sun Life Short-Term Fund | 4.93 | 7.03 |
| ICICI Prudential Short-Term Fund | 5.46 | 7.15 |
| Banking & PSU Fund | ||
| UTI Banking & PSU Debt Fund | 10.55 | 7.43 |
| Corporate Bond | ||
| ICICI Prudential Corporate Bond | 4.81 | 6.63 |
| Aditya Birla Sun Life Corporate Bond Fund | 4.32 | 6.77 |
| Money Market Funds (for immediate short-term goals) | ||
| Aditya Birla Sun Life Money Manager Fund | 3.01 | 4.92 |
| HDFC Money Market Fund | 2.95 | 4.88 |
When you have a time horizon between 3-5 years, you can also opt for Hybrid funds as they give you the added advantage of equity exposure along with debt diversification.
The above-mentioned funds are suitable for a time horizon of fewer than 3 years and for investors with a very low-risk appetite.
FAQs
What are short-term goals?
Short term goals are something you want to do in the near future which can be today, this week, this month, this year, or even within two years.
Which mutual funds are best for short term?
Here are some mutual funds for short term –
- Aditya Birla Sun Life Short-Term Fund
- ICICI Prudential Short-Term Fund
- HDFC Money Market Fund
This is not an investment advice. Please consult a financial expert for investing in mutual funds for short-term goals.
Are mutual funds good for short term investing?
Mutual funds are good for short term investing. There are some mutual funds that you can invest in for 3-4 months. These funds are likely to get you better returns than fixed desposits and savings account.
While planning for investments to achieve a goal, always consult an investment advisor who will help you with your goal-based investment journey in detail.
Consult an expert advisor to get the right plan
Disclaimer
This is not recommendation advice. All information in this blog is for educational purposes only.
