Investing for short term
That was quite a break
Image source – Indian Moms . After a big rest for 6 months finally up with a new post.
Now many of us have short-term funds (cash) that is mostly lying in our bank accounts or at home as emergency need. While there is no harm in keeping some contingency money always as cash however we can invest even some portion of this amount to earn additional return. I have previously written about how to generate extra cash by using your credit card here .
Now let us look on how we can increase our return on short-term cash
- Opening saving accounts with bank which offer higher interest rates – With Reserve Bank of India lifting law on fixed interest rate to savings account holders, Many of the modern private banks aka Yesbank, Kotak Manhindra are offering higher interest rates for having a savings accounts with them. Few banks also offer additional interest if you keep a balance of over INR 1 lac. While traditional biggies aka SBI,ICICI still offer 4% on your savings account , we should carefully examine if we are in need to continue to use their banking services or else we can switch. I would prefer that we open a new account and see if the switch is working fine before moving all of everyday banking to the new players.
- Putting money in liquid debt fund – FLAME defines liquid funds as those investments that can quickly be converted into cash. These funds are one of the ideal choices to invest one’s ready cash and earn tax-free dividends on them. You will need a demat account to invest in those funds and typically it will take 2 business days to receive cash once you redeem units. These are a very low risk investment option and one that we should evaluate to invest. See the list of best performing liquid funds here, the worst among the above list is earning 9%+ a cool 5% above your regular savings account.
Both of the above options are almost hassle free, while option 1 would require you to open a bank account – very easy these days. Option 2 would require you to have a demat account again can be done without fuss.
However making these small changes on how you park your cash can almost double your returns.
Know of other methods to deploy cash in a better manner, leave as a reply
– All though I have not been posting for past few months, have made some small changes
* Have moved to my own address
* Have got dedicated FB and Twitter page – I am planning to keep them updated.
* Read, Read, Read – So you would see more stuff coming
PS – All information discussed on this blog is for education purpose, investment done on basis of above would be at own risk.