Greetings,
If you’re saving for a short-term goal like a vacation, wedding, or emergency fund, you need safe and flexible investment options. Here are four solid choices:
1. Special FDs
We all know about traditional fixed deposits (FDs), but did you know banks offer special FDs with odd tenures like 400 days or 444 days? These offer higher interest rates than regular FDs.
Example: SBI’s 1-year FD gives 6.80% p.a., but if you wait for a 444-day tenure, you can get 7.25% p.a. Other banks have similar offers, so check for special FDs before investing.
2. FDs from NBFCs
While major banks and post offices offer around 7.5% p.a. for a 3-year FD, NBFC FDs (Non-Banking Financial Companies) can give even higher returns.
For example, Bajaj Finance offers 8.1% p.a. for a 33-month FD—a much better deal than regular bank FDs. You can invest in these through platforms like ET Money.
3. Debt Funds
Debt funds invest in corporate and government bonds, offering stable returns with more flexibility than FDs. Unlike FDs, they don’t have a fixed maturity, which means you can redeem your investment anytime.
SEBI classifies debt funds into different categories based on duration, so choose one based on your investment horizon:
4. Arbitrage Funds
Arbitrage funds make money by exploiting price differences of stocks between different exchanges (NSE & BSE). They offer low-risk returns, similar to liquid funds.
✅ Tax Advantage:
- Arbitrage funds are taxed like equities, which is beneficial for those in higher tax brackets.
- If you hold them for over 1 year, gains up to ₹1.25 lakh are tax-free, and any amount above that is taxed at 12.5%—a much better option than FDs and debt funds, which are taxed as per slab rates.
Hope it helps!
We put a lot of effort into creating such informative posts. If you learned something new, UPVOTE and SHARE to help us educate more readers.