Along with long-term financial goals, an ideal financial plan should also allow for meeting short-term financial requirements to cover the expenses of near future. Short-term goals are set to achieve necessary and unavoidable events set to occur in five years or less.
For example, if your child is finishing high school in 2 or 3 years and you know you have to pay a huge amount for his/her college, it can burn a hole through all of your savings. Having inadequate savings in the future can create a financial burden on your family in the event of any eventuality or after retirement.
The best you can do to achieve your short-term goals is to invest your money in short-term investment products.
Investment options for short-term
- Endowment policy: Endowment policies provide the policyholder with a lump sum amount at the end of policy term or at the event of death, whichever is earlier. You can invest in an endowment policy starting from 5 years, thus covering your expenses for short term. If you are looking for a good savings plan for short-term, an endowment policy is the way to go.
- National Saving Certificate: If you know that your need for lump sum money will come exactly after 5 years, you can consider investing in Postal NSC. You can enjoy the interest of 7.9 percent on your deposited amount, and the principal amount with interest is provided to you at the end of 5 years. Keep in mind the interest you will receive will be taxable.
- ULIPs: Unit linked insurance plan is considered one of the best savings plan irrespective of long term or short term investment. It is because of its feature to provide dual benefits of an insurance product and a growth product. You can invest a certain percentage of your premium in market-linked funds of your choice and can enjoy a return on your investment with the addition of death and maturity benefits and tax benefits for saving huge amounts of money in taxes.
- Equity: Commonly called ‘stocks’ or ‘shares’, equity is a very convenient and liquid investment alternative. Equity has historically provided better returns than other products, but it also comes at higher risk. With the Indian economy growing steadily, equity investments are set to give good returns.
- Savings account: One of the easiest and most liquid way to access your money id through a savings account. Though it doesn’t multiply your money like a ULIP plan or provide a lump sum amount after a certain period, it can still prove to be a good option if you want to invest your money without having to wait for a maturity period.
- Mutual Funds: They are professionally managed funds which invest your regular investments in assets of your choice (based on your risk appetite). There are a wide variety of options to choose from which combine equity, bonds and money-market instruments; often giving a chance to invest in gold and other commodities, too.
Edelweiss Tokio Life provides you with ideal insurance products for short-term investment including pension plans, endowment policies, and ULIP plan. All our plans come with an addition of tax benefits under section 80C and 10 (10D).