If it’s a vacation with family, daughter’s marriage, child’s education, down payment for a home, paying credit card bills, and emergency funds are the achievable short-term goals. Do you know how you can achieve any one of these goals? Very simple, with the right investment vehicle and strategy.
Most people don’t have a structured approach to saving money to achieve short-term goals. They don’t know the right techniques and investment options that suit their budget and hit the target within an expected time.
Have you created a short-term financial goal but don’t know how to achieve it? If yes, then your search ends here. This blog will tell you the well-researched tips that will help you accomplish the short-term goals.
What are Investment Opportunities Available in the Market?
There are plenty of investment opportunities available in the market. But not all are designed to hit the short-term goal target. We have squeezed the market and come up with investment opportunities that are only suitable for short-term goals.
1. Fixed Deposit
A fixed deposit is a financial instrument that provides investors a higher interest rate than a regular saving account. At the end of the maturity period, you will get a predecided rate of interest on a principal amount. FD’s are considered to be comparatively safer and are the best investment options in India for retirees (60 years of age) and low-risk profile investors.
2. Real Estate
Real estate is risk-free and one of the most popular investment options in the market. It deals with the buying, selling, or management of real estate properties. The risk-reward ratio depends on the location of the property. The house that you live in should never be counted as an investment. The second property that you buy is an investment. Real estate delivers a return in the capital appreciation of the property and the rent earned from the property.
Another profitable and risk-free investment that helps you achieve any short-term goal is investing in gold. It has been tested time and again that gold provides a strong shield against inflation. For those who want to buy gold for investment purposes, there is an alternative where you can own paper gold. This investment is cost-effective and can be done through gold ETFs. ETFs are traded in the stock market with gold as the underlying asset. You can invest in gold if you desire to diversify your investment and want to probably hedge against inflation.
4. Recurring Deposit
A recurring deposit is an investment instrument similar to the FD. Under this, an investor can invest a nominal account monthly for a certain period of time and earn fixed interests on the amount. You can open a recurring deposit account if you looking to save in a systematic manner.
5. Mutual Funds
Mutual funds are among the most popular invested options. This investment option offers you multiple schemes depending on your financial goal, risk appetite, and time horizon. One of the significant reasons to invest in mutual funds is that you don’t need to have large capital to begin. Investments in Mutual Fund scheme can be starts with Rs. 500 also
Available Mutual Fund Products that help you to Meet your Short-term Goals
1. Debt Funds
Debt mutual funds are the best option for investors who aim for regular income with less risk. Rather than opting for the traditional investment options associated with low risk and low return, choose debt funds that help you achieve a shorter-financial goal in a more efficient manner and aim to offer a great return.
SIP allows you to invest a small sum regularly in your preferred Mutual Fund schemes. Every time you invest in a mutual fund scheme through SIP, you purchase the scheme’s units at the applicable NAV in exchange for money and benefit from the bearish and bullish market trends. You can take the help of the L&T Mutual Fund calculator to estimate the return.
2. Ultra-Short Funds
Ultra-Short Fund is an open-ended debt scheme that invests in fixed income instruments with up to six months’ maturities.
3. Liquid Funds
Liquid mutual funds or liquid funds are a category of debt mutual funds that primarily invest in financial instruments like treasury bills, government securities, call money, etc. Liquid funds are mutual funds that invest in securities with residual maturity of up to 91 days. The advantage of investing in liquid funds is that it provides high liquidity.
4. Income Funds
Income funds predominantly invest in debt securities with extended maturities. Mutual Funds also offer dynamic bond funds. The average maturity period of income funds is about 5-6 years. These funds invest in a mixture of debt instruments like corporate bonds, money market instruments, and certificates of deposit. The returns under income funds depend on the market conditions and the performance of the fund.
5. Fixed Maturity Plan
Fixed maturity plans are very similar to fixed deposits. They are close-ended debt funds. They invest in fixed-income securities which mature on or before the maturity of FMP. Being close-ended schemes you can invest in these funds only during the initial offer period and through a stock exchange where the particular FMP is listed.
We hope this comprehensive guide on achieving short-term goals helps you a lot. Among other investment options, mutual funds’ flexibility makes them an ideal option for every type of financial objective/goal. Whether your financial goals are short-term or long-term, you can aim to achieve them by investing money in mutual funds. And to make your investment experience hassle-free, take the help of the right mutual funds’ companies like L&T Mutual Fund.
Disclaimer: This information is for general information only and does not have regard to the particular needs of any specific person who may receive this information. L&T Investment Management Limited, the asset management company of L&T Mutual Fund or any of its associates; does not guarantee/indicate any returns/and shall not be held liable for any loss, expenses, charges incurred by the recipient. The recipient should consult their legal, tax, and financial advisors before investing. The recipient of this information should understand that statements made herein regarding future prospects may not be realized or achieved.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.