Best Investment Plan for 1 Year 

Best Investment Plan for 1 Year

Investment is important for financial growth and security. By putting money into assets like stocks, bonds, and real estate, you can earn returns that outpace inflation. Investment also preserves and increases wealth over time. It is a medium to achieve long-term financial goals such as education, retirement, and home ownership. 

When you invest your money in the right manner, it serves as a buffer against economic uncertainties and unforeseen expenses. By having a diverse investment portfolio, you can spread risk and enhance resilience. In short, investment is a proactive strategy that empowers individuals to build wealth, beat inflation, and secure their financial future. 

In this article, we will explore the best investment plan for 1 year so that you can earn excellent returns in a shorter duration. Some of the potential investment plans include:

  • Fixed Deposit
  • Recurring Deposit
  • Post office term deposit 
  • Large Cap Mutual Funds
  • Hybrid Mutual Funds
  • P2P Lending

Best Investment Plan for 1 Year

Investing for 1 year provides an opportunity for capital appreciation and interest gains. While the risks are higher in short-term investment, strategic investment can yield returns and profits. Let’s have an in-depth understanding of the short-term investment plans. 

1. Fixed Deposit

If you are looking for a secure and stable avenue for parking your funds, short-term fixed deposits can be an ideal option. With a predetermined interest rate, the brief period of investment gives you predictable returns. In simple terms, fixed deposits allow you to park a share of your extra savings while experiencing notable wealth growth. 

Compared to other investment plans for 1-year duration, fixed deposits facilitate low risk, which makes them an ideal investment option for conservative inventors. Recently, the Punjab National Bank has increased the rate of interest on FDs of 300-day tenure from 6.25% to 7.85% for super senior citizens, 7.55% for senior citizens, and 7.05% for general citizens.

2. Recurring Deposit

Recurring Deposit, or RD, allows investors to make regular deposits and earn interest. RDs are flexible saving-cum-innvestment instruments that are different from term deposits in many aspects. The term of recurring deposits ranges from 6 months to 10 years, and that’s what makes it an ideal investment plan for investors looking to invest for a shorter term.  

Recurring deposits aim at inducing the habit of regular savings, and one can invest with a small amount of Rs. 1000. Depending on the bank, recurring deposits are eligible for premature withdrawals on certain conditions. Although investors can decide the term of the deposit, the interest rate, once determined, remains the same throughout the tenure and on maturity. 

3. Post Office Term Deposit 

The investor deposits money with India Post for a lock-in period of 1, 2, 3, or 5 years. The Post Office Term Deposit (POTD) scheme allows for convenient investment since the network is widely distributed across the country. Individuals or groups of up to three people can maintain a single deposit account. The term of deposit can be extended on a written application. 

Minors may open accounts, provided their parents or guardians maintain the account until they reach maturity. This is the best investment plan for 1 year in India because the government decides the rate of interest. You can open as many accounts as you want. Plus, you get tax benefits on a 5-year Post Office Term Deposit scheme under Section 80C of the Income Tax Act. 

4. Large Cap Mutual Funds

In this scheme, people invest money primarily in the biggest brands in the country. These equity funds are ideal for investors looking to invest money for a longer tenure of at least 5 years and, hence, are not a preferred short-term investment option. However, large-cap mutual funds are liable to dividend distribution tax and capital gains tax since they are equity funds.

The benefit of investing in Large Cap Mutual Funds is that they provide stable returns with an assurance to withstand economic uncertainties. It is the best investment plan for risk-averse investors looking for excellent returns in the long term. 

5. Hybrid Mutual Funds

Also referred to as balanced funds, hybrid mutual funds combine different asset classes within a single portfolio. The goal of these funds is primarily to provide investors with diversified investment options that include both bonds and stocks in different proportions. These funds aim at balancing the potential for capital appreciation (from stocks) with income generation and capital preservation (from bonds).

Different types of hybrid mutual funds include aggressive hybrid funds, balanced hybrid funds, conservative hybrid funds, and dynamic asset allocation funds. The investors choose the best investment plan for 1 year based on their investment goals, risk tolerance, and tenure. If you want exposure to both equity and debt markets without actively managing the asset allocation, this is an ideal investment option. 

6. P2P Lending

Peer-to-peer lending (P2P lending) is a financial technology that enables individuals to avail loans from one another without involving a banking institution. P2P lenders connect borrowers directly to the lenders; hence, the individuals do not have to deal with intermediaries. The interest rate is usually lower than the banking institutions; however, ensure that you understand the terms and conditions properly. 

An investor opens an account with a P2P lending company and deposits a sum of money. On the other hand, the interest rate varies based on the credit score of the applicants. In P2P platforms like LenDenClub, for a one-year holding period, the lenders’ average portfolio return is between 12 and 14 per cent.

How to Choose the Best Investment Plan?

When selecting an investment plan, consider evaluating your financial goals, time horizon, and risk tolerance factors. Spread the risk by diversifying across assets. Choose a reputable and transparent investment provider with a track record of reliability.  

So, consider the below-mentioned factors when choosing an investment plan for 1 year.

  • Investment Goals: Analyse your investment goals for one year to understand whether you are looking for income generation, capital appreciation, or capital preservation. 
  • Risk Tolerance: Access your risk tolerance level. High returns often come with higher risks. 
  • Interest Rate: Monitor interest rates as they can impact your investment, especially fixed-term securities. 
  • Inflation Rate: Consider the inflation rate to ensure that your returns can beat inflation and preserve the purchasing power of your money. 
  • Liquidity: Consider how easy it is to convert your investment into cash. 
  • Tax Implication: Understanding tax implications as a tax-efficient investment can enhance your overall returns. 
  • Historical Performance: Look at how the FDs from preferred banks have performed in the past to understand the interest rates and returns. 
  • Costs and Fees: Consider transaction costs, management fees, and other expenses associated with the investment. 

Conclusion

To sum up, selecting the best investment plan for 1-year horizon requires a thoughtful balance between risk and return. Consider low-risk options such as bonds, fixed deposits, post office term deposits, or recurring deposits for capital preservation. 

Research thoroughly to understand the investment’s past performance, potential returns, and the fee involved. While a one-year tenure may limit potential return, prudent choices aligned with financial objectives can help yield satisfactory results. 

Frequently Asked Questions 

1. What is the difference between hybrid mutual funds and balanced funds?

The Hybrid Mutual Funds investment option has 7 sub-categories, and the Balanced Funds is one among them. These funds invest 40% to 60% of assets in equities while the rest goes into debt. 

2. What are the best short-term investment options for 1-year in India?

Consider options like Fixed Deposits, Recurring Deposits, or Post Office Term Deposits (POTD) for stable returns within a year. 

3. How do I determine the risk level for a 1-year investment plan?

Assess your risk tolerance and financial goals. Typically, conservative investment options such as FDs or debt funds are suitable for risk-averse investors. 

LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping investors diversify their investments beyond traditional investment instruments ever since.


LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping lenders diversify their investments beyond traditional investment instruments ever since.

About

Lending

The Reserve Bank of India does not accept any responsibility for the correctness of any of the statements or representations made or opinions expressed by Innofin Solutions Private Limited, and does not provide any assurance for repayment of the loans lent through its platform.

LenDenClub is an Intermediary under the provisions of the Information Technology Act, 2000 and virtually connects lenders and borrowers through its electronic platform via the website and/or mobile app.

The lending transaction is purely between lenders and borrowers at their own discretion, and LenDenClub does not assure loan fulfilment and/or lending simple interest. Also, the information provided on the platform is verified or checked on the best efforts basis without guaranteeing any accuracy of the data/information verification. Any lending decision taken by a lender on the basis of this information is at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower, fully or partially. The risk is entirely on the lender. LenDenClub will not be responsible for the full or partial loss of the principal and/or interest of lenders’ lending amounts.

*This is an annualized yield and is subject to the maximum FMPP tenure, which is 5 years. P2P lending is subject to high risk and may cause an entire loss of principal.
 

*P2P lending is subject to risks. And lending decisions taken by a lender on the basis of this information are at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower.

** Average value mentioned is the weighted average of simple interest received by lenders

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