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Short Term Strategic Investments Will Prevent Debts And Result In Capital Gains

Often people make the wrong decision while choosing a product for investing looking at the apparent benefits, rates, terms, and conditions thereby ending up in debt. Ignorance is not always ‘bliss’ especially when it comes to investing your hard earned money in any type of investment. To make sure that your investment is safe and fruitful and you do not end up in debts, you will need to follow specific strategies both in short as well as on the long-term basis.

Strategies are the foundation of a good investment that needs a lot of calculations and considerations of several factors that influences the rate of returns from it. Ideally, it is best to talk to an expert in investments as they know a lot about the current as well as the upcoming trends of the money market. They will help you to make a better forecast so that you can make the most out of this high yielding investment that is often much higher when compared to any form of bank or corporate fixed deposits.

Rate, inflation, rise, and fall in market conditions, demand and supply and the overall political, social and economic conditions will play a significant role in your investment endeavor.

Short term strategy considerations      

As for the short term strategies for your investment goals, there is a lot to consider just as it is for the long-term plan.

If you want to make the most in the short term basis, it is best to invest in products that mature within six months to a year. Ideally, these income funds that usually have a portfolio that consists of debt securities predominantly. Will offer you high yields on your investments on maturity.

One thing that is very good and attractive in these types of securities is that even if the rates of interest fall from the current levels, you can still benefit from these investments. 

You will get high returns from these short terms investments either in the form of capital gains or during its maturity. Most significantly, you do not have to wait for a long time to enjoy the results that will be in your favor most of the times. Add to that, if you feel that a specific type of investment at the particular rate is not to your liking you can make amendments and manage your funds within the next six months and redirect your money toward much higher yielding portfolios.

Make the best of your idle cash

Short tenure investment strategy is the best way to make the most of your idle money lying in your bank account, current or savings.

  • As a responsible investor, you must look for making investments only in liquid funds. These funds have a very low-risk level associated with it as compared to all other products and will provide you with a steady and good enough income.
  • Depending on the economic policy of the country these liquid funds and single year FMPs are good enough a choice as it can fetch you as high as 8 to 10 percent return on each investment.
  • If you crave for more from these investment types, then know that you can also gain a lot in tax benefits as well adding on to your savings, indirectly and virtually.

As these FMPs are all close-ended mutual funds, these are typically invested in low risk and high yielding money market instruments such as call money, Treasury bills, CDs and CPs. If you have any ongoing debts to take care of these types of investments can prove to be a practical and useful debt management programs. Of course, you can also avail other forms of debt management strategies as suggested and mentioned in or any other for that matter.

Medium range investments

If you find that keeping up with the efforts required to manage your funds on 6 to 12 months’ time window on a regular basis is difficult or is asking for a bit too much, you can consider investing in those medium range investment products.

  • These investments will provide you with an investment horizon of two to three years. For this purpose, the gilt funds are the best option to invest to enjoy the maximum benefit from capital gains. However, you must know the right time to invest in these funds and these pay the maximum returns only when the rates of interest ease off.
  • If you have an investment horizon of one to two years as per the policy of your investment product, you will be well off to set up a high yield limit from your investments on its maturity. If are very particular about the investment tenure then locking your investments in any high yielding FMPs is the best strategy.

All you have to do is consider the flexible management and other fees of these FMPs before you invest in wealth management and accumulation.

For shorter investments

However, if you want to invest for a much shorter term say for less than six months, then the most sensible and useful approach is to invest in fixed deposits offered by different banks. There are also different liquid funds and ultra-short term funds as well in which you can park your money. These ultra-short-term and liquid funds usually invest in various money market instruments such as CDs, CPs, and treasury bills. These funds are equally good in providing high yields in a very short time.

Change in interest rate scenario

The most significant factor that you should consider to make your investment worthy on a short-term basis is to consider the changing scenario in the rate of interest. Calculated as a percentage on an average, these rates vary according to different factors and prevailing market conditions, social as well as political conditions.

The short-term funds will generate returns irrespective of the fact that the rate of interest is stable or falling. However, when the rate of interest rises sharply, these funds may generate negative returns, which is why strategic planning is required.

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