Best Investment Plan For 3 Years

Picture this: You want to pursue your passion, such as renovating your home, travelling, or writing a book. But you also have a full-time job, a family, and bills to pay. So, how can you fund your dream without giving up your financial stability?

The answer lies in investing your hard-earned money for short term of 3 years or less. But with so many options available, where do you start? How do you choose a plan that offers liquidity, safety, and decent returns?

Let’s dive deep into the best investment plan for 3 years and fulfil your financial aspirations.

Best Investment Plan for 3 Years

Did you know that three years is an ideal short-term investment duration? It’s long enough to allow your assets to grow but short enough for you to access your money when needed.

Here are some of the best investment options for a 3-year horizon:

1. Savings Account

Are you a conservative investor who values capital preservation above high returns? If so, a savings account may be the most convenient option to park your money for the short term. 

Although it might seem a little conventional, you get easy access to your funds, the safety of capital, and a steady interest income. 

Key Features:

• Unlike the volatile stock market, savings accounts offer guaranteed returns.
• Offers unparalleled liquidity – you can withdraw your funds anytime without penalties.
• Some banks offer competitive interest rates that can rival other short-term investment options.

2. Liquid Funds

They are a type of debt mutual fund that invests your money in short-term money market securities like T-bills and commercial bonds. These options are less sensitive to market volatility and provide a more stable return.

Key Features:

• The risk factor is significantly lower, given their investment in high-quality, short-term securities.
• It comes with a lower expense rate, enhancing the net returns for investors.
• Offers high flexibility and a swift redemption process. It allows you to redeem your investments within a short processing time.

3. Fixed Deposits (FDs)

Fixed deposits are one of India’s most popular and traditional investment options. They allow you to deposit a fixed amount of money for a fixed time, ranging from 7 days to 10 years, and earn a fixed interest rate.

Key Features:

• They are a risk-free investment choice, insulated from the market fluctuations.
• Offer higher interest rates compared to savings accounts.
• Certain banks offer enhanced interest rates for senior citizens. It adds an extra layer of benefit for this demographic.
• Provides a safety net – you can use your FD as loan collateral in crises.

4. Short-Term and Ultra Short-Term Funds

Do you want your park surplus funds for a short duration while earning higher returns? Look no further than Short-Term and Ultra Short-Term Funds! 

These plans invest in debt instruments with a maturity period of up to 1 year and 3-6 months, respectively. As a result, they offer a perfect balance between liquidity and return in a short duration.

Key features:

• Offers diversification benefits and lowers the impact of volatility on your portfolio.
• Invests in short-term debt securities and other low-risk avenues.
• Get higher returns on investment in comparison to liquid funds and FDs.

5. Fixed Maturity Plans (FMPs)

Exploring FMPs could be a game-changer in your search for the best investment plan for 3 years. These unique close-ended debt funds offer a balance of safety, stability, and attractive returns.

The vehicles park your money in high-quality fixed-income instruments. It includes certificates of deposit, corporate bonds, government securities, and more.

Key Features:

• They offer stable returns with minimal deviation from the expected amount.
• You can only buy these securities during NFOs presented by asset management companies.
• Fit for investors seeking low-risk, short-term plans with a fixed duration.

6. P2P Lending

Peer-to-peer (P2P) lending has gained lot of traction in India as an alternative lending and borrowing option. Regulated by the Reserve Bank of India (RBI), P2P lending platforms operate as intermediaries connecting lenders directly with borrowers, facilitating loans without the involvement of traditional financial institutions.

Lenders can diversify their investment portfolio by spreading their funds across multiple borrowers by thoroughly checking their risk profiles, which reduces overall risk. 

Key Features:

RBI guidelines emphasize fair practices, not allowing misleading advertisements, and discriminatory lending policies.

P2P platforms provide flexibility in terms of loan amounts, tenures, and interest rates.

P2P platforms maintain escrow accounts to segregate investor funds from operational accounts, this helps to prevent misuse of fund security.

P2P loans have faster approval and disbursement rates compared to traditional banks, enabling borrowers to access funds quickly

7. Gold Investment

Investing in gold is a lucrative option – it has been a favourite among Indians for generations. You can buy physical gold like jewellery, coins, and bars. Or even better – opt for gold-related instruments like ETFs, bonds, digital gold, and more.

Key Features:

• With gold investments, you get a hedge against inflation and currency fluxes.
• It comes with high liquidity, as you can sell your gold investments in the market. 
• Say yes to diversification benefits. It has a low or negative correlation with other asset classes.

Benefits of 3-Year Investment Plans

Investing in the best investment plan for 3 years is a great way to grow your wealth in a defined timeframe. Let’s take a closer look at some of the incredible benefits:

• They provide flexibility and liquidity, allowing you to access your funds when needed.
• Some investment options offer tax benefits, helping you maximise your returns.
• Investing in different short-term plans can diversify your portfolio and spread risk.
• They help you meet specific financial goals within a shorter timeframe.

Wrapping Up

Choosing the best investment plan for 3 years involves assessing your risk tolerance, financial goals, and the level of return you seek. Thus, take the time to explore these short-term options and make a well-informed decision.

But why settle for less when you can earn even better returns? Harness the power of hyper-diversification and invest in new-age instruments with LenDenClub. Get in touch with us today!