Seeking the best one-year investment plan? Then you should have an absolute reason to invest your money just for one year only. For instance: Marriage or higher studies of your children.
Most investors prefer to invest in the one-year plan that assists in maintaining the liquidity of funds. Emergency or urgent money needs may arise at times without notice. So this is an article for such investors who are constantly looking forward to the best investment plan for 1 year.
Here is the list you need to go:
6 Best Investment Plans for 1 Year
You have enough finances to let investors make short term investment plans for 1 year. There are more likely to be a one-time investment plan that is listed below to discuss them in detail:
Fixed Deposit
Undoubtedly, a Fixed Deposit (FD) is the safest investment plan. The investors can make their investment for the short-term for like one year.
The tenure of fixed deposit is available in different types as you can choose the one as per your choice. Most of the time depositors prefer government sector banks, thus guaranteeing that your money is completely safe.
Tenure Period: Investors can deposit their money in any length of tenure period they want such as 6, 9, or 12 months.
Amount Returns: Based on the length of the deposit, the rate of interest varies. You are free to opt for month-to-month, quarterly, half-yearly, yearly, or cumulative options. Generally, the Fixed Deposit interest rate in banks is 6.5% per annum if you invest for 12 months or more. The senior citizens may get 0.5% higher among them.
Liquidity: If the maturity period ends, such an amount can be invested if you don’t have any emergency need. In that instance, you can opt for month-to-month, quarterly, yearly, half-yearly, etc.
Taxation: Obviously, the depositors getting interest rates through FD are eligible for tax deductions. However, it may also depend upon the earning slab and income.
Fixed Maturity Plans
The depositor of this fund gets constant income. A fixed Maturity plan is a kind of close ended mutual fund and let’s see how it benefits you.
Tenure Period: The tenure period of Fixed Maturity Plans varies from 1 month to 5 years.
Amount Returns: FMP is debt-oriented as you are assured of consistent returns and keeps you from market fluctuations. Unlike other options, the fixed maturity plans don’t have fixed returns.
Liquidity: The liquidity of FMP is very low. Here the depositors make their investment fixed for that particular period of time when they are positive.
Taxation: The gains you can expect in 36 months are taxed at the rate of 20%.
Arbitrage Mutual Funds
The fund manager will invest in both cash and derivative segments. Arbitrage mutual funds have a low level of risk and take advantage of opportunities in the derivative segment and equity market.
However, the open ended mutual fund is the best choice, if you would like to have tax benefits for at least one year. Arbitrage funds are completely depending upon the spot markets and future.
Tenure Period: To avail of tax gain benefits, maintain your investment at least for 365 days.
Amount Returns: The returns from arbitrage funds rely on the possibilities between the future market and the instant market. The returns are around 6 percent per annum, and it is not constant.
Liquidity: The liquidity of arbitrage is high as they’re open ended mutual funds.
Taxation: The profit that you made for 36 months is about to pay 26% of the tax rate.
Post Office Term Deposit
Post office deposits are one of the safest investments where you don’t worry about your money.
Tenure Period: Fast term is the best investment plan for 1 year in the post office. Since the depositor is open to put money for 1, 2, 3, and 5 years. Here, the 1-year investment is a fast term and it is considered as eligible for interest payable.
Amount Returns: The rate of interest is guaranteed and fixed for the complete length. 1-year is a short-term period goal wherein you can get an interest rate yearly, however it is calculated quarterly. Most probably, they take months from April to June as one year to pay the interest rate of 6.6% to 7.4% varies based on the time period you choose.
Liquidity: The interest rate in the post office scheme will be paid yearly. The withdrawal is impossible before the estimated period of time.
Taxation: The interest rate is considered as one income slab and added to one’s earnings.
Liquid Funds
The return of liquid funds is almost predictable and matures in 91 days. It may be anything like commercial papers, t-bills, certificates of deposit, etc. There is a possibility that the fund value may go down significantly if the underlying asset is about to low.
Tenure Period: A liquid mutual fund has a maturity period of 91 days
Amount Returns: Interest rate can be calculated based on the debt holding, only a small part of income is generated through your capital. Aside from that, the interest rates and bond prices are opposite to each other. When the rate of interest upwards, the bond prices fall and vice versa.
Liquidity: Liquid funds offer high liquidity based on credit safety.
Recurring Deposit
A recurring deposit is an ideal choice for depositors who are looking for the best investment plan for 1 year. Unlike other investments, you are not burdened to pay huge sums of money in one go. After the tenure period of deposit, you will receive your investment with a lump sum of maturity amount.
Tenure Period: The tenure period of recurring deposits in banks comes in handy. Depositors may open for a tenure below 6 months and it extends up to 10 years.
Amount Returns: The interest rate of RD accounts is around 6.5% per annum in ordinary banks.
Liquidity: RD account has a minimum lock-in period of 1 month and if you withdraw within a time limit no interest rate will be credited. The interest of the depositor is calculated on the investment and period of deposit.
Taxation: The rate of return in RD will be taken as one’s profit slab. If a person is earning Rs.10,000 or above for 12 months, the TDS will be deducted from all the banks.
Bottomline
The monthly investment plan for 1 year or short-term investment would be the best option that will give decent returns.
The aforementioned investment plans are best in India as it is advisable to ensure some important factors such as risk profile, investment goal, diversification, and more. You can seek essential guidance from the banks you are about to invest.