If you have short-term financial goals and want a low-risk investment, some mutual funds are especially organized to prioritize capital preservation and liquidity.
These funds generally invest in secure assets including treasury bills, money market securities, and other short-term debt instruments. This makes them an excellent choice for investors looking for stability while yet having simple access to their funds when necessary.
Here are top 5 mutual funds for short-term investments:
1. Liquid Funds:
These are debt mutual funds having maturity period of up to 91 days. They invest in short-term investments such as treasury bills and certificates of deposit (CDs). Liquid funds have a low credit risk and are less influenced by interest rate fluctuations. They also provide quick redemption options, making them an ideal solution for investors looking for both safety and quick access to their assets.
2. Ultra Short Duration Funds:
These funds have a portfolio duration of 3 to 6 months and invest primarily in debt securities. They provide slightly higher returns and risk than liquid funds. These funds are suited for individuals seeking a 6-month or longer investment horizon with a balance of moderate risk and decent returns.
3. Corporate Bond Funds:
These funds focus on high-quality corporate bonds, with at least 80% of their assets allocated to bonds rated AA+ or higher. Corporate bond funds, with maturities ranging from 1 to 3 years, offer stability and are a great option for people with a medium-term investment horizon of 2 to 3 years.
4. Banking & PSU Debt Funds:
These funds aim to reduce credit risk by investing in high-quality securities issued by well-known banks and public sector organizations. They typically give attractive coupon payments and predictable returns over a two to five-year investment horizon. This makes them an excellent option for conservative investors looking for security and consistent revenue.
5. Arbitrage Funds:
Arbitrage funds rely on differences in prices in equity markets to provide low-risk returns. They earn consistent returns by capitalizing on these discrepancies, regardless of overall market trends. These funds are classified as equity funds under tax law, making them an appealing short-term investment alternative for investors seeking reliable, tax-efficient returns.
When choosing funds, it is important to consider your risk tolerance and financial objectives. Different funds have different risk and return potentials, so it’s important to align them with your investment goals. Furthermore, tax considerations play an important influence in fund selection. Gains from debt funds, for example, are taxed according with your income tax bracket, whereas equity-based funds, such as Arbitrage Funds, are treated differently. To maximize your profits, you must first consider the long-term tax impact of your assets.
- Chocolate Day 2025: Here’s Top 5 Chocolate You Can Gift to Your Love - February 8, 2025
- ‘Ne Zha 2’ Breaks Box Office Records, Becomes Highest-Grossing Chinese Film - February 8, 2025
- Valentine’s Day Playlist: Top 10 Best Love Songs to Make Your Night Extra Special - February 8, 2025