Ultra-short-term funds invest in debt securities with a limited maturity period, ranging between 3 and 6 months.ICICI Prudential Ultra Short Term Fund Direct Growth.
|Min Investment Amt||₹5,000|
For a short period of 3 to 6 months, you can either park your money in liquid mutual funds or ultra short term debt mutual fund. Liquid Mutual Funds usually invest in government securities and certificate of deposits of up to 3 months duration.
If the investor wishes to invest funds for a short duration (15 days or less), he/she can go for liquid funds and if they wish to invest funds in funds with a maturity period of 2 months to 4 months, they can opt for ultra short-term mutual funds.
The majority of mutual funds are liquid investments, which means they can be withdrawn at any time. Some funds, on the other hand, have a lock-in term. The Equity Linked Savings Scheme (ELSS), which has a 3-year maturity period, is one such scheme.
The minimum tenure for investment in Mutual Funds is a day and the maximum tenure is ‘perpetual’.
There is no fixed tenure for SIP. However, the minimum period is six months. RDs are not prone to risks and are a safe form of investment.
|Mutual fund||5 Yr. Returns||Min. Investment|
|ICICI Prudential Short Term Fund - Direct Plan - Growth||7.59%||₹5000|
|UTI Banking & PSU Debt Fund - Direct Plan - Growth||5.59%||₹5000|
|Aditya Birla Sun Life Short Term Fund - Direct Plan - Growth||7.56%||₹1000|
|IDBI Short Term Bond Growth||6.81%||–|
Here are 4 financial instruments in which you can put your short-term money.
So overnight funds are unlikely to be facing a situation where they will go down in value even on an overnight basis. The liquid funds can go down in value. However, the likelihood of them going down in value is not that often, owing to the stringent regulations.
How can I withdraw money from my systematic investment plan as I am facing some cash crunch now? You can withdraw your investments periodically unless they are under the lock-in period. You can withdraw via SWP (systematic withdrawal plan) route by redeeming a fixed amount at a given frequency.
Short duration funds are debt mutual fund schemes which invest in debt and money market securities such that the Macaulay Duration of the scheme is 1 to 3 years. The investment objective of these funds is income generation through accrual over the maturity term of the instruments in the scheme portfolio.
In India, most of the mutual funds do not have a lock-in period. There is only one exception in the category of open-ended schemes, which is the Equity Linked Savings Scheme (ELSS). ELSS are tax-saving mutual funds which have a lock-in period of 3 years.
However, if you decide to withdraw money sooner, specifically within 1 year of making an equity investment, then your gain will be taxed at a flat tax rate of 15% plus cess plus surcharge. If you withdraw your units of equity mutual funds within 12 months of investing then short-term capital gains will arise.
Distributions and your taxes
If you hold shares in a taxable account, you are required to pay taxes on mutual fund distributions, whether the distributions are paid out in cash or reinvested in additional shares. The funds report distributions to shareholders on IRS Form 1099-DIV after the end of each calendar year.
If an equity scheme is underperforming continuously for three years or more as compared to its peers, you could consider exiting the scheme and transferring your investment to a similar fund that has a proven track record.
Mutual Fund schemes usually don’t have a maturity date unless you have invested in a close-ended ELSS or other close-ended schemes like FMPs. Even in case of a SIP, there is a term for which investments need to be made regularly.
Systematic Investment Plan SIP is a method of investment in a mutual fund and not a product.SIP Vs Mutual Fund.
|Parameters||SIP||Lump-sum Mutual Funds|
|Cost||Less due to rupee cost averaging||High as the investment is done in a single transaction|
|Volatility||Less impact||More impact|
Generally, an SIP carries an end date after 1 Year, 3Years or 5 years of investment. The investor can hence, withdraw the amount invested whenever he wishes or as per his financial goals.
5 best short-term investment options in India
Traditionally, the majority of mutual funds are long-only, meaning if something was considered undervalued, it would be invested in, and if a security was thought to be overvalued, the only thing investors are able to do is to avoid investing in it.
List of top mutual funds, assessed on the basis of their relative performance within a particular category, and for a specific time period.Top Funds.
|colspan=“2”>Fund Name||Aditya Birla Sun Life Medium Term Plan|
An overnight fund is a suitable option for those investors who want to invest their money in a fund but only for a short time. Since these funds do not get affected by the changes in interest rates and other defaults in securities, it is a safe debt Mutual Funds to invest in.
Exit load in mutual funds. Mutual Fund exit load is a fee charged by the mutual fund houses if investors exit a scheme partially or fully within a certain period from the date of investment, as specified in the Scheme Information Document.