Investing your money can yield much higher returns than just parking it in the savings account. It will help you grow your wealth, ensuring long-term financial security. However, when investing for one year, you must choose the best investment plan considering all aspects, such as reason for investment, risk tolerance, liquidity, and volatility.
For investment having a short-term horizon, you might not want a benefit that comes with a risk as there is little time to recover if there are any unfavorable situations causing a dramatic plunge in the market.
Hence, considering the volatile nature of the market and your short-term investment horizon, it is better to stay away from equity or stock SIP plans.
This article will inform you about all the best investment plans for 1 year in 2023.
6 Best Investment Plans for 1 Year in 2023
Select any of these investment plans if you want a risk-free, short-term term investment without keeping exposure of your money to market instruments:
1. Debt Mutual Funds
These funds are perfect for short-term investment horizons. Unlike equity funds, debt mutual funds are open-ended and do not involve any risk. They offer a high level of security and stable growth. The fund managers of these funds further invest people’s money in debt instruments, including government & corporate bonds, treasury bills, etc.
You can earn up to 7% annual returns on the invested amount. Thus, debt mutual funds offer much higher returns than a regular savings bank account. If you want to pick these funds as your investment option, you should invest a lump sum amount.
You will be amazed to know that the MF Industry’s AUM has grown from Rs.23.06 trillion as on July 31, 2018 to Rs.46.38 trillion as on July 31, 2023, more than 2 fold increase in a span of 5 years.
2. Fixed Deposits
For decades, fixed deposits have been a preferred investment choice for people of all ages. Offering a stable and consistant return, this is one of the best investment plans for 1 year if you put a lump sum corpus to get a high return from FDs.
The best part about this investment plan is you can make investments for 3, 6, 9, or 12, depending upon the bank. Moreover, you can renew such deposits upon maturity and re-invest if you do not require money immediately. FDs can generate up to 7.4% interest per annum, varying from bank to bank. However, the interest rate offered on FDs is usually higher by 0.25% to 0.65% for senior citizens.
3. Post Office Term Deposits
Are you one of the risk-averse investors? Then, the Post Office Term Deposits are apt for you. It is a lump sum deposit scheme with a tenure of 1, 2, 3, and 5 years.
These debt funds generate fixed returns, which the Government of India decides every year. The current rate of these deposits ranges between 6.90% to 7.50% as of 2023.
Remember, you will earn interest at the prevailing rate. If you make any new investments in the future, then your return will be generated as per the announcement of the latest interest rates.
4. Arbitrage Mutual Funds
Arbitrage Mutual Funds leverage the price differential in the cash and derivative market that may or may not generate higher returns than above mentioned investment plans.
Arbitrage Mutual Funds are classified as hybrid funds that generate returns according to the volatility of the asset. You should refrain from investing in these funds if you want a stable and safe return.
However, if you want a balanced portfolio with a blend of growth and yielding assets with moderate risk tolerance, this is one of the best investment plans in 2023. Remember, it is mostly opted by investors willing to invest for long term, or at least 3 to 5 years.
Some of the best Arbitrage Mutual Funds include Aditya Birla Sun Life Arbitrage, Axis Arbitrage Fund, L&T Arbitrage Opportunities Fund, and many more.
5. Liquid Funds
Liquid Funds offers one of the most rewarding ways to park short-term funds for one year. These funds invest in money market instruments that mature within 91 days. The market instruments could be treasury bills, commercial papers, government securities, certificates of deposits, etc.
Investing in these investment plans offers high liquidity. The reason is that Liquid Funds come without any entry or exit load. Although they are not entirely risk-free, this is a preferred option if you want to take minimal risk and possibly generate higher returns.
You can invest in one of the best Liquid Funds in the market, including ICICI Prudential Liquid Fund, UTI Liquid Cash Plan, HDFC Liquid Fund, etc.
6. Recurring Deposits
RDs are mostly preferred by investors willing to invest a fixed sum every month rather than a lump sum amount. At the end of the tenure, you will receive a lump sum amount with interest (same as that with FDs).
This investment plan is mostly opted for by investors who seek the power of compounding in the long run. However, investing in RDs to attract a better return on your investment is still better than keeping your money in a savings account.
Conclusion
Investors must understand their financial objectives and evaluate their risk appetite before choosing an investment plan. Additionally, they should not forget to consider tax benefits with regard to their income tax slab.
You can opt for safe investment options if you do not want to bear any risks, such as FDs or Debt Mutual Funds. However, if you can take a minimal risk in a fluctuating market, you can park your money in a Liquid Fund or Arbitrage Fund and possibly earn good returns.
So, which investment plan did you pick after reading this article?
Nikita Sikri is a content specialist who simplifies complex ideas and produces SEO-driven content for SaaS and AI-writing platforms. Her strategic writing skills generate leads, nurture them and boost ROI.
4 Comments