Six Best Investment Plans For One Year | Kotak Securities (2024)

Best Investment Plan For 1 Year

Here are the six best investment plan with high returns for a period of 1 year:

1.Debt Funds

A debt fund is a good choice if you plan to invest for a short period of time. Investing in these funds is risk-averse and open-ended. Since debt mutual funds invest in high-rated debt instruments such as treasury bills, government bonds, and corporate bonds, they offer a high level of security.

A debt fund can also provide much higher returns than a savings account. Debt funds include low duration funds. Investments in these funds are made in securities that mature within six months to a year.

2. Arbitrage Mutual Funds

An arbitrage mutual fund invests in both cash and derivative segments, taking advantage of opportunities in the equity market as well as opportunities in the derivatives segment. You can invest in open-ended funds if you are willing to stay invested for at least one year to take advantage of the tax benefits.

Arbitrage funds have a low level of risk. Nevertheless, the returns are not guaranteed since arbitrage opportunities are not always available. Because of this, arbitrage funds depend on the futures and spot markets for arbitrage opportunities.

3. Liquid FundsMost liquid funds investments are in debt instruments that yield a predictable return and mature in 91 days. It may be t-bills, certificates of deposit, commercial papers, etc. There are no entry or exit loads on these best investment plans. However, fund values might drop significantly if the credit rating of the underlying asset is suddenly downgraded, so these funds are not completely risk-free.

4. Post Office Term Deposit

It is considered to be one of the best investment plans with high returns. POTDS are available with tenures of 1, 2, 3, and 5 years. POTD investments are backed by a sovereign guarantee. Every quarter, the government fixes the rate of return. All investments will earn returns at the current rate. Following the announcement of the new interest rate, all new investments will earn that rate of return.

5. Fixed Deposit

One of the best investment plans for 1 year in India is fixed deposits (FDs). If you have a lump sum available, you can invest it in a fixed deposit. The interest rate on FDs is much higher than that of a savings bank account. Due to the fact that fixed deposits cannot be withdrawn, they are also considered to be highly secure investments.

6. Recurring Deposit

You can invest a small fixed sum regularly with a bank through recurring deposits (RDs). At the end of the recurring deposit period, you will receive a lump sum with interest. As you cultivate the habit of setting aside a fixed sum regularly, RDs will help you instill financial discipline.

As with FDs, RDs also offer much higher returns than regular savings accounts. Also, it is not really a good idea to keep your funds in a savings account for more than a year. To earn a good return on your investment, you should consider investing in this best investment plan for 1 year in India.

Factors To Consider Before Investing In Funds For 1 Year

When investing in the above mentioned best investment plan in India, there are many factors to consider. Among the most important factors are:

• Know Your Investment GoalIt is important to know your investment goal before investing in the best mutual funds in india. It is best to invest in short-term funds if you plan to do so for a short time period.

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• Risk ProfileUnderstanding your risk profile is also essential before investing in any financial product. The best way to determine this is to take an online risk assessment test or speak with an investment advisor. Make sure that your risk profile aligns with the products you invest in.

• DiversificationThe importance of diversification when investing in India cannot be overstated. By investing in different types of mutual funds or stocks within the same sector (e.g., tech stocks), you can diversify your portfolio.

In this way, you will be able to lower your overall risk level while still taking advantage of potential gains.

• TaxationDepending on how long you hold short-term mutual fund investments before selling them (or when they expire), the tax treatment of short-term mutual fund investments varies. When the funds are held for less than three years, capital gains tax has to be paid.

• Fund PerformanceSince short-term mutual funds invest in low-risk bonds and other securities that are easy to liquidate, they have a lower risk profile.

4% to 6% is the average return on a short-term fund. However, it depends on where you invest and who you choose as your provider.

• Expense RatioThe expense ratio determines how much of a fund's assets are used for administration and operating expenses. The lower the expense ratio, the better off you'll be when you withdraw your money later.

• Entry And Exit LoadsThese fees are charged when you buy or sell shares in a mutual fund through a broker rather than directly from the fund. Before investing in any fund, be sure to understand mutual fund basics. They can range from 0% - to 3%.

Conclusion

The best investment plan for 1 year in India is a very good option if you want to earn a profit from a lump sum amount of money that you don't need immediately, but still want decent returns. However, before picking the best investment plan in India, make sure to consider factors such as investment goal, risk profile, diversification, etc. You can seek guidance from Kotak Securities, a reputable financial service provider, for any stock market investment.