Short-term investments have their rewards and challenges. While choosing the best investment plan for 1 year, you need to balance your return expectations, risk appetite, and liquidity needs.
To make consistent returns, long-term investments stand out as the most appropriate option. But, every time, you cannot afford long-term investments. You may have short-term goals like planning your vacation or putting aside your surplus funds for your daughter’s marriage next year.
You will find a wide choice of one-year investment plans in the market. But the choices can be confusing, as not every investment may be suitable for you. As they have different features, risks, benefits, and limitations.
In this article, we will look at some of the best 1-year investment plans with high returns in 2023. We will go over their features in-depth and show you which documents you will need. This will guide you on the roadmap to find the best one-year investment plan tailored to your preferences and needs.
Best investment plans for 1 year
Say you have some extra chunk of money that you want to stash for 1 year for buying a car or to build your emergency. An investment planner can help you create a comprehensive 1-year investment plan that can yield good returns helping you achieve your desired goals.
To make this process simple for you, we have compiled some of the best investment plans for 1 year based on our research-
Debt mutual funds
Debt Funds are mutual funds that invest in fixed-income securities such as treasury bills, corporate bonds, government securities, etc. Also popular as Income or Bond Funds, these funds have stable returns of around 4-6% p.a. and can be redeemed within a day or a week.
Debt Funds have low to moderate interest rate risk and credit risk. Based on your desired maturity, you can choose from different categories of debt funds, such as liquid funds, ultra-short duration funds, low-duration funds, etc.
|Type of Debt Fund||Features|
|Liquid Funds||Low duration fundMaturity less than 91 daysHigher post-tax returns than a savings bank account|
|Ultra Short-term Funds||Low Duration FundsMaturity within a yearReturns slightly better than liquid funds|
|Floating Rate Funds||Lower sensitivity to rate changesPreferred by low-risk investorsLess sensitive to|
Also Read: What Is The Difference Between Digital Gold And Physical Gold Investments?
Arbitrage Mutual Funds:
These are hybrid funds that take advantage of the price difference of the same asset in different markets. They offer returns of around 5-7% per annum and can be redeemed within a day. They have very low risk as both the buying and selling prices are known to the fund manager.
These funds are among the best investment plans for one year due to their tax efficiency and high liquidity.
|Arbitrage Mutual Fund||Better tax-adjusted returnsThrive in volatile marketsHigh transaction cost as trades are done every day|
Bank/Post Office Fixed Deposits
A fixed deposit is the best investment plan for 1 year for you if you are risk-averse and want to play it safe. These are deposits made with banks or other financial institutions for a fixed period, usually from 7 days to 1 year.
They offer guaranteed returns of around 5-8% per annum, depending on the tenure and the interest rate prevailing at the time of investment.
They can be withdrawn before maturity by paying a penalty. They carry no risk as they are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to Rs. 5 lakhs per depositor per bank.
|Fixed Deposit||Guaranteed returns Liable for tax as per the applicable tax slabHassle-free auto-renewal of depositsInterest is compounded periodicallyLoan facility on FDs available|
Fixed Maturity Plans (FMPs)
FMPs are closed-ended mutual fund investments that are ideal for investors with clarity of tenure in their minds. FMPs stand as one of the best investment plans for 1 year. As they carry lower interest rate risks and are relatively more stable than other stock market instruments.
FMPs invest in debt tools such as treasury bills, corporate bonds, etc., during the new fund offers (NFOs) during the subscription period.
|FMPs||Come with a Lock-in periodLow-risk Relatively stable with stock market variationsTaxed as per applicable slab|
What are the documents required for an investment plan for 1 year?
Now that we have discussed some of the best investment plans for 1 year, you must be super excited to get started. However, before you jump on to investing, you need to have the proper documents ready to avoid any hassle or delay.
The documents required for a 1-year investment plan may vary depending on the type of investment plan you choose. As for mutual funds, you require a different set of documents than making a fixed deposit.
Therefore, we have listed here some of the common documents that you may need are:
Application form In this form, you need to fill in your details, investment details, bank details, nominee details, etc. You can get this form directly from the concerned office or even download it online.
KYC form This form contains your identity and address credentials as per the applicable RBI norms. You need to fill out this form and submit it along with your proof of identity (POI) and proof of address (POA). Some of the documents acceptable for KYC include PAN cards, Voter ID cards, NREGA cards, Aadhar cards, Government ID cards, etc.
PAN card This is a mandatory document for any investment plan in India. It is a 10-digit alphanumeric number that acts as your unique identification for tax purposes. You need to submit a self-attested copy of your PAN card with every investment you make.
Recent photograph You need to provide a recent passport-sized photograph along with your application form and KYC form. Your face should be visible in your photo taken against a plain background.
Age proof If you are investing in a plan that has an age criterion, such as a senior citizen savings scheme (SCSS), then you need to provide proof of your age along with your application form and KYC form.
Also Read: What is NPS and How is it Good for Investment?
These are some of the basic documents required for a 1-year investment plan. Further, you must check with the bank or office for requirements of any additional documents specific to the scheme. Always retain a copy of the documents submitted for future reference and record-keeping.
To wrap up, a 1-year investment plan can be a smart way to achieve your short-term goals and earn high returns. However, you must choose the best plan that syncs with your risk tolerance, desired returns, and investment horizon.
Various 1-year investment plans are available in the market, such as mutual funds, fixed deposits, post office schemes, etc., which can offer high returns for 1-year investments. You should do your research and analysis before investing in any of these plans.
Choosing the best investment plan for 1 year can help you grow your money and secure your future.
So, don’t wait and start investing today!