Liquid funds are the best avenue for short term investments for just a couple of months. But then is it really an investment, or are you simply parking cash? Liquid MFs are the best option to park cams for the short term (say upto 1 year). Please do this with your emergency fund and also to meet any immediate cashflows.
Do not term it as an investment however. The best investments are indeed those made for the long-term, not a couple of months. This is because true wealth creation requires time, patience, and the magic of compounding to unfold. Renowned investor Warren Buffet rightly said, “Our favourite holding period is forever.”
If you invest in liquid mutual funds, returns can be anywhere between 3-6% per annum. However, these returns are not guaranteed because they fluctuate based on market conditions. In general, they do provide better returns compared to saving accounts, and their high liquidity ensures you can redeem your investment anytime without a penalty.
For the amount of 40,000 INR, considering an average return of 4% per annum for ease of calculation, you can expect around 533 INR if you invest for a couple of months only. This is a ballpark figure and can vary depending on the fund’s performance and market conditions.
If you are considering making actual investments (not just parking cash), diversified stocks, equity mutual funds or balanced funds are more suitable. While these involve higher risk, they also have the potential for higher returns over the long run.
It is always advisable to align your investments with your financial goals, risk tolerance, and investment horizon. This strategic approach ensures your money is working effectively for you. If you need a trusted advisor, consider Jama Wealth to unlock your wealth’s potential; our expert investment advisory and tailored services are designed to elevate your financial success.
