Life is full of moments that deserve to be celebrated or prepared for, be it a long-awaited vacation, a family wedding, or building an emergency fund for peace of mind. While these goals may not be decades away, they still need thoughtful financial planning. The good news? You don’t need to lock your money away for years to make it grow.
That’s where short term investment plans come in. These are designed for goals that are just around the corner, typically 6 months to 3 years away, and offer a smart balance of safety, liquidity, and modest returns.
In this guide, we’ll explore the best short term investment plans in India that can help you save efficiently and stress-free for upcoming life events.
What Are Short Term Investment Plans?
Short term investment plans are financial tools meant for individuals who want to grow their savings over a shorter period, usually between 3 months to 3 years, without taking on significant risk. Unlike long-term investment plans, which focus on compounding over decades, short-term options prioritise liquidity and capital preservation.
They’re perfect for:
- Saving for a vacation abroad
- Funding a wedding or large celebration
- Creating or growing an emergency fund
1. Liquid Mutual Funds
Ideal For: Emergency fund or short-term savings up to 6 months
- Invest in treasury bills, certificates of deposit, and other short-duration instruments
- Returns: 4% to 6%
- Withdrawal within 24 hours on business days
- Minimal risk and suitable for surplus funds
Why it works: Your money stays safe, grows better than in a savings account, and remains accessible when needed urgently.
2. Recurring Deposits (RDs)
Ideal For: Wedding expenses or planned travel in 1–2 years
- Fixed monthly deposit over a fixed tenure
- Returns: ~6% to 7%
- Lock-in: 6 months to 3 years
- Offered by banks and post offices
Why it works: It encourages disciplined saving. Start small and gradually build your fund over time, especially if you have a fixed target in mind.
3. Ultra Short-Term Debt Funds
Ideal For: Vacation or wedding goals within 1–2 years
- Invest in debt securities with slightly longer durations than liquid funds
- Returns: 5% to 7% (market-linked)
- Risk: Low to moderate
- Liquidity: Withdrawable in 1–3 business days
Why it works: Offers slightly higher returns while still keeping your money relatively liquid. Suitable for those comfortable with mild fluctuations.
4. Fixed Deposits (FDs)
Ideal For: Any short-term goal needing guaranteed returns
- Tenure: 7 days to 3 year
- Returns: ~6% to 7.5% (varies by bank and tenure)
- Safe and easy to open online or at a branch
Why it works: Perfect for risk-averse savers. You can also ladder FDs across multiple tenures for flexibility and better liquidity.
5. Post Office Time Deposit (1–3 years)
Ideal For: Short-term savings with government backing
- Similar to bank FDs but backed by the Government of India
- Minimum investment: ₹1,000
- Returns: ~6.9% (as of 2025)
- Tenures: 1, 2, or 3 years
Why it works: Suitable for those in semi-urban or rural areas who want secure, fixed returns with no market risk.
6. Sweep-in Savings Account
Ideal For: Emergency funds with automatic returns
- A hybrid between savings and FD
- Any balance above a threshold is auto-converted into an FD
- Offers higher interest than savings accounts with full flexibility
Why it works: Gives you both liquidity and better returns. Great for building an emergency fund without locking your money away.
7. Low-Duration Hybrid Funds
Ideal For: Slightly aggressive savers with goals beyond 1 year
- Mix of equity and debt for moderate returns
- Returns: 6% to 9% (not guaranteed)
- Moderate risk, ideal for 1–3 year time horizons
Why it works: For savers willing to accept a bit of volatility in exchange for better returns, suitable for non-negotiable goals like a destination wedding or family trip abroad.
How to Choose the Right Plan for Your Goal
Here’s how to match your goal with the right plan:
| Goal Type | Time Horizon | Recommended Plan |
| Emergency Fund | Ongoing | Liquid Fund / Sweep-in FD |
| Vacation (India) | 6–12 months | RD / Short-Term FD |
| Vacation (Abroad) | 1–2 years | Ultra Short-Term Fund / Hybrid Fund |
| Wedding (Less than 1 year) | <1 year | FD / Post Office Time Deposit |
| Wedding (1–3 years) | 1–3 years | RD / Debt Fund / Hybrid Fund |
What to Avoid in Short Term Investments
- PPF, NPS, and ULIP plans: These are great for long-term goals but come with lock-in periods of 5–15 years
- High-risk equity funds or stocks: Volatile in the short run, not suitable for fixed deadlines
- Real estate: Low liquidity, high transaction costs, and not ideal for goals within 3 years
Final Thoughts
You don’t need decades to grow your money. With the right short term investment plans, you can save efficiently for the things that matter most, be it a dream vacation, a special celebration, or simply the peace of knowing you’re financially prepared for emergencies.
The key is to align your investment with your goal’s timeline, your comfort with risk, and the level of liquidity you need. Whether you prefer the predictability of fixed deposits or the flexibility of liquid funds, there’s an investment plan out there that fits your needs perfectly.
