If you just have a year to invest, you should avoid stock options due to the market’s volatility. Capital protection is important for investments with a short-term perspective since there isn’t much time to regain if the market takes a turn for the worst. So where to invest money for 1 year ??? Let’s check out the major suitable options for best monthly investment plan for 1 year .
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Introduction of 1 year investment plan
There are numerous instances where investors desire to make a one-year investment. This will happen when the goal is nearing completion, but you have no idea when it will happen (such as a marriage within the family). And, in order to do so, you must ensure that the funds are immediately available whenever the need comes.
Where to Invest Money for 1 Year?
If you’re a risk cautious person who just wants to invest for a year, consider the following 1 year investment plans:
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Debt Funds
Short-term investment views are suitable for debt funds. These funds are open-ended and risk-averse. Debt mutual funds provide a high level of security since they invest in high-rated debt instruments including treasury bills, government, and corporate bonds.
Furthermore, debt funds have the potential to provide significantly greater returns than a traditional savings account. You may invest in low period debt funds under debt funds.
These funds invest in assets with a six-month to one-year maturity. Aside from that, you might want to look at money market funds. These funds invest in short-term money market tools with a one-year maturity.
Returns & Liquidity
The returns, on the other hand, are neither certain nor consistent. At the moment, you can expect to make around 7% each year. For the best results, align your investment horizon with the maturities of the underlying assets of such funds before investing. The liquidity in certain funds is high, and units may be redeemed in a short period of time.
Taxes
Taxes are one of the important point in out topic Where to Invest Money for 1 Year. Profits earned throughout the first 36 months of ownership must be included in one’s income and taxed accordingly.
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Arbitrage Funds
Second idea in Where to Invest Money for 1 Year is Arbitrages funds. This sort of mutual fund makes money by leveraging the gap between derivatives and cash. The rewards are determined by the market’s volatility. Arbitrage Funds are a good place to put your money if you have extra income, a modest risk appetite, and want to take advantage of tax breaks. These funds are classified as equities mutual funds for tax purposes.
Returns & Liquidity
The chances are low even if the rewards aren’t certain. Returns on investment are currently approximately 6% per annum. Arbitrage fund returns, like FMPs, are neither predictable nor consistent. They have a lot of liquidity because they’re open-ended schemes.
Taxes
Short-term capital gains on arbitrage funds sold within a year are subject to a 30% tax, whereas long-term capital gains on arbitrage funds sold beyond a year are subject to a 10% tax.
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Fixed Maturity Plans
Closed-end mutual funds are fixed maturity schemes. These funds put their money into fixed-income products with long maturities. The fund manager will select instruments that mature virtually simultaneously.
Fixed maturity plans are available with maturities ranging from one month to five years. These funds are unaffected by interest rate volatility since they keep securities until they mature.
The fundamental goal of fixed maturity schemes is to provide consistent returns over time.
Returns & Liquidity
FMPs are mostly debt-oriented, with the goal of providing stable returns over a short maturity term, thereby protecting traders from market volatility. FMPs are not affected by interest rate volatility because the securities are held until maturity. In FMPs, however, the returns are not set nor guaranteed.
Liquidity is limited, regardless of the fact that FMPs are indexed on inventory exchanges. Spend money on them just if you’re certain you’ll be able to lock in your funds for that period of time.
Taxes
Taxation is similar to the debt price range. Gains made within 36 months after keeping them must be added to one’s profits and taxed accordingly.
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Treasury Bills
These are short-term money market securities issued by the government with a maturity of up to a year. There are three maturities for T-bills: 91 days, 182 days, and 364 days. They’re given out at a discount and then redeemed for face value.
For example, a Treasury Bill with a face value of Rs. 100 can be purchased for Rs. 95. Buyers are paid Rs.100 on the maturity date.
Returns & Liquidity
Returns are currently in the range of 5 to 7 percent every year. Treasury notes are risk-free and have a high level of trade ability.
Taxes
Taxation is similar to the debt price range. Gains made within 36 months after keeping them must be added to one’s profits and taxed accordingly.
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Liquid Funds
T-bills, commercial papers (CP), and term deposits are examples of money market instruments that an open-ended debt fund can invest in. Liquid Funds have a 3 to 6 month maturity.
Returns & Liquidity
It’s a low-risk mutual fund plan that pays out more than your bank’s FDs or savings account. Liquid funds, which give returns in the range of 7-9 percent, are suitable investment vehicles if you are seeking for a short-term investment period. The mutual fund scheme’s liquidity is one of the factors that makes it appealing to investors.
Taxes
The interest rate is applied to one’s wages and taxed in accordance with one’s income bracket.
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Post Office Fixed Deposit
A government-backed investment plan, the Post Office Fixed Deposit (or Post Office Time Deposit Account), is a government-backed investment plan. Investors can put their funds at any post office in India under this arrangement. A deposit in a post office FD can be made with as little as Rs.1,000. It’s a good option for anyone looking for a safe place to put their money.
Returns & Liquidity
The returns are fixed and certain once invested, with a sovereign guarantee for the whole term. For a short-term objective, you might put money into a 1–12 month time deposit with a yearly interest rate that is computed quarterly.
The rates are re-set with the help of the government in every area, and they only apply to new investments made in that quarter of the year. The interest is paid out once a year.
Premature withdrawal is not usually permitted before the six-month period has expired. After that, one may give up the deposits.
Nevertheless, the amount of interest collected in the event of an early withdrawal of the deposit may be at a reduced rate of interest.
Taxes
The interest rate is applied to one’s wages and taxed in accordance with one’s income bracket.
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Recurring Deposit
If you want to invest a little fixed quantity with a bank on a regular basis, recurring deposits (RDs) are a good option. At the conclusion of the recurring deposit’s term, you will get a lump amount plus interest.
RDs will help you develop financial discipline by instilling the habit of setting away a specified amount of money on a regular basis. In the long term, this is advantageous.
Returns & Liquidity
Ordinary deposit interest rates may be the same as the rate applicable to a regular bank FD. For most tenures of one year and up, it’s now approximately 6.5 percent each year. The interest rate may be relevant as of the date of the first installment.
The RD account usually has a one-month minimum lock-in period. If the account is not closed within a month, no interest is given to the depositor, and the majority of the money is returned.
Interest will only be computed on the price relevant for the duration of the deposit if the deposit is withdrawn early.
Taxes
The hobby rate generated is added to one’s earnings and taxed according to one’s profit slab. TDS can be deducted if the hobby generated is more than Rs 10,000 in a year (including interest on bank savings) across all branches of the bank.
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Fixed Deposits
Last idea in Where to Invest Money for 1 Year is Fixed Deposits. Fixed Deposits (FDs) are a classic way of investing in India. If you have a large sum of money to invest, a fixed deposit is a good option. FDs pay a greater interest rate than a traditional savings account. Fixed deposit assets are also regarded to be very safe because there is no risk of flight.
Most banks let you invest in an FD online. You can also invest for 6, 9, or 12 months, or even longer, as different banks offer different deposit terms.
Returns & Liquidity
You may choose from month-to-month, quarterly, half-annual, yearly, or cumulative pastime options in them, according to your needs. Banks’ interest rates are closely linked to the Reserve Bank of India’s (RBI) repo rate, and thus to the financial institution’s personalized fee of funds.
For maximum duration of a year and above, it is now approximately 6.5 percent each year. Senior citizens receive a 0.5 percent bonus on their deposits.
These deposits may even be renewed at maturity, allowing the budget to be reinvested if the need arises. You may also pick from month-to-month, quarterly, half-yearly, 1 year investment plan payment, depending on your needs.
Taxes
The interest income is added to one’s income and taxed according to one’s income category.
Conclusion
You can select any of the investment plans if you have extra funds and wish to invest for a short period of time. You may easily get consistent returns by taking modest risks while keeping your short-term financial objectives in mind.
This is all from our side regarding Where to Invest Money for 1 Year. Although, if you have any doubts one year investment plan you can just comment below.
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