Instead of leaving your money stagnant in a savings account, you could be growing it without moving a finger. First-time investors in India have a plethora of options available to them, including short-term and long-term schemes. We’ve listed ways to grow your savings fast through short-term investments. However, we recommend that you diversify your investment portfolio after doing proper research.
1. Recurring and Fixed Deposits
Recurring and fixed deposits are some of the safest ways to grow your savings. By locking money into a deposit account, the amount steadily increases through interest accrued on the balance.
Recurring deposits (RD) grow your monthly deposits in a bank throughout a predetermined tenure. Generally, your money increases in an RD between a tenure of 6 months to 10 years. A recurring deposit is best for people who are still in the process of bulking up their savings account.
Fixed deposits (FD) work on a one-time lump sum. Your tenure lasts between 7 days to 10 years. This deposit is best for people who are ready to invest their savings now for higher returns.
FDs typically produce higher returns than RDs. Additionally, FDs have shorter tenures, which results in faster accessibility to your money. If you’re ready to lock in a portion of your savings through a risk-free investment, consider opening up a fixed deposit account. People who would like to deposit a small portion of their salary on a monthly basis can look into a recurring deposit for equally safe, but slightly slower results.
2. Short-Term Mutual Funds
A mutual fund is another type of investment made up of a portfolio of securities. Mutual funds are considered short-term when they have an investment period up to 3 years. However, you can find ultra short-term mutual funds that range between 3 months and 1 year.
Debt mutual funds are great for short term investors who want to take quick advantage of money sitting in their savings accounts. By investing in fixed-income instruments, you can find up to 7% to 9% returns within 12 months.
Liquid mutual funds (or money market funds) are a type of debt fund that invests in near-term fixed-income instruments like cash. They have high liquidity and you can redeem your potential profit faster than other debt funds. If you have a substantial amount of savings ready to invest into a short-term fund with low risk, then consider growing your savings fast with a liquid mutual fund.
Note: While we advise that you hire a professional fund manager to help you create a diverse portfolio, it is possible to do the research and grow your savings yourself.
3. Post Office Savings Schemes
Your local post office provides many options to grow your savings, as well. For instance, you can open a Post Office Savings Account with an interest rate of 4.00%.
If you’re seeking the fastest way to grow your savings account, consider a Post Office Time Deposit Account (TD). TDs have tenures between 1 to 5 years. While longer tenure accounts will have a higher interest rate of 6.7%, you can still avail rates up to 5.5% for tenures up to 3 years.
Lastly, the Post Office Monthly Income Scheme Account (MIS) allows you to earn an interest rate of 6.6%. You must keep the MIS account open for at least 1 year, but those who can wait it out will be able to avail monthly fixed income from the scheme.
Generally, post office savings accounts have higher returns than a bank’s FD. However, the post-office is deemed less efficient in customer service, which is important to keep in mind if you are choosing between the two ways to grow your savings.
4. Equity Linked Savings Schemes (ELSS)
ELLS Mutual Funds are diversified equity funds best for salaried individuals and first time investors. This investment has more risk than the others on the list, but the rewards have high potential due to its averaging and power of compounding.
ELSS funds are considered short-term, as they have one of the shortest lock-in periods among other tax-saving schemes. The ELSS was designed to save investors on tax, however you will need to be prepared for a lock-in period of 3 years.
ELSS carries more risk when you are investing over a short term. We recommend this option to those who have surplus savings in their account and understand the implications of investing in medium-risk schemes.