For best returns, investing money for ultra short term ie 3 to 4 months is quite a tricky decision, as investing in each saving instrument has its benefits. One option is to keep this money in your bank savings account, on which you will get an average of 3% interest. You can claim tax deduction under Section 80TTA of the Income Tax Act on the interest of up to Rs 10,000 deposited in it.
At the same time, apart from this, you can deposit money in fixed deposits (FDs) of banks for 3 to 4 months. The country’s largest bank SBI offers 3.90% interest on FDs of 46 to 179 days. At the same time, another option is sweep-in, sweep-out FD. In this, the bank gives you interest for the same number of days, as many days there are deposits in the bank.
Another option to invest for ultra short term is liquid funds, but this too gives FD as much as 3.65% interest. But there is a tax on investment of less than 1 year, if you withdraw all the money. So what is the best option for investing 3 to 4 months, today we tell you.
This is the best option for big returns
Ahmedabad Status Financial Literacy Initiative Founder of Moneyeduschool Arnav Pandya says that if you are investing 5 lakh rupees for short term then Ultra Short Short Term Mutual Funds is the best for you. Option.
Its maturity period is 3 to 6 months. Arnav Pandya said that this Mutual Fund has given 5.35% returns in the last one year, which is 2% more than any saving instrument. At the same time, investors in debt funds do not have to worry about withdrawal time.
FD attracts penalty on pre-mature withdrawal, but does not apply to debt funds. If you feel that money can be withdrawn at any time, then Debt Fund is a better option for you. If the amount is not very big, then you can also keep money in a savings account.
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