Investments are assets that you buy with a goal to increase their value in the future. Time plays a crucial role in your investment strategy. Markets act differently depending upon the course of your investments. On the basis of the duration of the investments, they can be classified into two types – long-term investments and short-term investments.

Long-term investments are those which you hold for a period  of more than 3 years. If you are someone who is patient and doesn’t want instant returns, long-term investments are for you. Long-term investments are like wine, they get better with time – they grow materially over time and give you higher returns in the long run. However, if you can’t promise high levels of commitment, discipline, effort and time, then short-term investments should be your thing. Generally, a period of 1-3 years is considered as short term. Best short-term investments are usually done with a small amount of money to meet your short-term goals. These investments involve lower risk but the returns are not so high.

We have curated a list of best short-term and long-term investments for you.

Short-term investments:

Savings Account In A Bank: This is by far the safest and the simplest way to earn assured returns. The advantage of bank deposit is that it is almost completely risk-free and can be liquefied whenever you want. However, the returns are not high and are taxed. Banks offer a return ranging from 4%-6% and are credited in your bank account usually on a quarterly basis.

Short-Term Fixed Deposits: A fixed deposit is a financial asset where you can deposit your money for a fixed period of time. Upon the maturity of the FD, the principal amount along with the interest is returned to you. However, unlike a savings account, you cannot withdraw or use the money held with FDs before maturity, unless you are ready to pay some pre-closure penalty.

Short-Term Mutual Funds: Often, mutual fund advisors recommend that people who are either new to mutual funds or are looking for a short-term investment option to invest in Short-Term Mutual Funds. It is also an ideal short-term option for people who are looking to diversify their investments.

Long-term investments:

Peer-To-Peer Lending: Online money lending or P2P lending is the newest asset class that offers high returns. Investing in P2P lending is rather simple and is completely online. When you invest in P2P, you are giving your money to an individual, based on his/her  creditworthiness. There are various P2P platforms that let you invest in this new age asset class.

Stocks: One of the most popular financial instruments, these investments can yield attractive returns but the risk involved is fairly high. Experts advise that only people who have some knowledge of how the stock market functions should invest in this asset class. Stock markets can tend to be volatile depending on a lot of factors. On the basis of your risk capacity, there are several types of funds that you can invest in. to streamline the investment, you can also choose to invest in a Systematic Investment Plan (SIP) and reduce the substantial risk by creating a portfolio in the long run with small investments at regular intervals.

The choice of your investment option majorly depends upon your investment horizon and your goals. Choosing the right asset class to invest in is very important if you want to get the maximum returns. Your investment portfolio should be well-balanced in terms of risks and returns.

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