Buying a new bike.

Taking an extended family vacation.

Or saving up for your next year’s annual life insurance premiums.

What do all these financial goals have in common? Well, they’re all short-term financial targets, achievable within the next 1 to 3 years at most. To build the corpus needed for these goals, you need to choose investment options with a tenure that matches the timeline of the targets. For instance, it would not make any financial sense to choose a 10-year investment plan for a goal that you need to accomplish within the next 2 years.

What you need instead are short-term investments. And here is a closer look at the 5 best investment options in this category in India.

1. Bank Fixed Deposit

A bank fixed deposit is an ideal short-term investment option for you if you are not a big risk-taker. Since it keeps your capital intact and offers you guaranteed returns on your investment, you can rest assured that your goal of capital preservation is taken care of.

Investment tenure:

Bank fixed deposits have tenures ranging from 7 days to 10 years or more. So, you can choose a tenure that aligns with your financial goals.


The rates of interest on fixed deposits vary from one bank to another. Typically, the returns you can expect are in the range of 6% to 8% per annum.

2. Corporate Deposit

A corporate deposit works just like a bank fixed deposit, except that the funds are deposited with a company rather than a bank. Typically, corporate deposits carry a slightly higher risk than bank FDs, so they’re ideal for conservative investors who want to take on a bit of a higher risk.

Investment tenure:

The investment tenure for corporate deposits can range from around 1 year to 5 years, making them highly suitable for short-term investment goals.


On account of the higher risk in corporate FDs, they offer returns at rates that are slightly higher than the interest rates on bank FDs.

3.Short-Term Mutual Funds

Mutual funds are investment vehicles that pool together the capital from various investors and invest those funds in different asset classes. Based on your risk profile, you can choose from different types of mutual funds. For instance, debt funds are suitable for conservative investors since they invest primarily in fixed income instruments. On the other hand, if you are a risk-taker, you can choose equity mutual funds.

Investment tenure:

The investment tenure varies from one mutual fund to another. If you want to invest for goals in the near future, you can choose short-term mutual funds with a tenure of 1 to 3 years.


The returns on your mutual fund investments depend on the type of fund you choose. Liquid debt funds typically offer returns in the range of 7% to 9%, while equity funds may offer higher returns if the stock market performs well.

4. Recurring Deposit (RD)

Another excellent short-term investment option for conservative investors, RDs are suitable for you if you do not have a lump sum amount to invest right away. You can open a recurring deposit and invest a small fixed sum of money each month, earning interest thereon.

Investment tenure:

The investment tenure in recurring deposits is also flexible. You can choose a tenure ranging from 6 months to 10 years or so. Make sure you align your RD tenure with your investment goal.


The rate of returns on your recurring deposit will depend on the bank that you choose to open your RD with. The interest rate may range from around 3% to around 8% or more per annum.

5. Real Estate Investment Trust (REIT)

REITs are companies that own and operate income-generating real estate. They allow you to invest in the real estate sector in a less capital-intensive manner. REITs work much like mutual funds and are regulated by SEBI too, making them more transparent and reliable. Typically, around 80% of the REIT’s investments must be in revenue-generating properties, making them suitable investment options if you want higher returns without too much risk.

Investment tenure:

There is no fixed investment tenure for REITs. You can liquidate your investments whenever you want to, making them good short-term investment options as well.


REITs offer around 90% of the income earned as dividends. Since the returns depend on the state of the real estate market, you can expect good returns if the real estate sector performs well.


If you are planning to diversify your investment portfolio with some short-term assets, these options can help you out. In addition to this, you can also consider investing in assets like gold, which is highly liquid and can easily be converted into cash. And as always, remember to distribute your funds across different investment options instead of concentrating your capital in just one asset. This way, the risk of capital erosion is reduced and your short-term goals are also taken care of.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.