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Where to Invest Money for Short Term

Short term investing and the stock market are a dangerous combination. If you’re looking to put away some money for the short term, then the stock market is not the right place.

You could do what everyone else does and invest in fixed deposits. But what if you want to explore your options a bit. Where can you invest your money for the short term?

One option is liquid funds. In financial markets there is no such thing as risk free. But liquid funds are the closest you can get.

These are funds that invest in money market securities like commercial paper and treasury bills. The risk of default is extremely low.

There are ultra-short-term and short-term bond funds as well. These are not as safe as liquid funds but still fairly safe. Be sure to pick the best debt funds with a top credit rating.

There are also short-term government securities you can buy either via short-term g-sec mutual funds or directly via the RBI’s retail direct scheme.

As long as you hold these bonds till maturity, the risk of loss is zero because the redemption of these bonds at maturity is guaranteed by the government.

These are the options before someone who wants to invest money for the short term. Due to its simplicity and familiarity, most investors would still prefer fixed deposits over the other options.

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