1. Bank Fixed Deposits
One of the safest and most traditional forms of investment, Bank Fixed Deposits (FDs), tops the list of short-term investment plans. With a tenure ranging from seven days to ten years, choosing a 3-year term for your FD can be an excellent short-term investment plan. While the returns might not be as high as some other risk-associated investments, they are reliable and secure, making FDs a suitable option for risk-averse investors.
2. Debt Mutual Funds
For those willing to accept a slight risk for better returns, Debt Mutual Funds can serve as an effective investment plan. Debt funds primarily invest in fixed-income securities like treasury bills, government securities, corporate bonds, and other money market instruments, aiming to provide steady returns. They are less volatile than equity funds and are suitable for an investment horizon of 3 years.
3. Liquid Funds
Liquid funds are mutual funds that invest in debt and money market securities with a maturity period of up to 91 days. They aim to provide liquidity, safety, and moderate returns to the investor. Although they aren't risk-free, they are among the least risky mutual funds, offering higher returns than regular savings accounts. They also allow you to withdraw your funds anytime, making them an attractive short-term investment plan for 3 years.
4. Recurring Deposits
If you prefer to invest a certain amount periodically instead of a lump sum, Recurring Deposits (RDs) can be an excellent choice. RDs operate much like FDs but allow you to deposit a fixed sum every month for a chosen period. At the end of the term, you get your invested amount along with the accumulated interest. This systematic investment approach can work as a disciplined 3 years investment plan.
5. Arbitrage Mutual Funds
Arbitrage mutual funds capitalise on the price difference of securities in different markets. They purchase security from a market at a lower price and sell it in another market at a higher price. The difference is the investor's profit. These funds generally have a low risk and provide better returns than traditional saving instruments. Given their risk-return profile, they can serve as one of the best investment plans for 3 years.
6. Short-Term Bonds
Short-term bonds, or bond funds, are debt instruments that can be an excellent investment choice for 3 years. They offer higher returns than bank FDs, although with slightly higher risk. However, this risk is still significantly lower than that of equity investments. Corporate bonds and government bonds are two types of bonds that investors can consider for short-term investment.