Best Investment Strategy for Short Term | ETMONEY

In many of our videos, we have helped you put together an investment plan for achieving one’s long-term goals. But it’s also true that most of us have several short-term goals .. like buying a phone, planning a vacation, tuition, paying back a short-term loan, purchasing a bike, etc.

In this video, we shall try to put together an investment plan for managing money over short periods.

Topics Covered:
00:00 Introduction
01:03 Short Term Goals
02:49 Selection criteria for short term investments
08:10 setting up your short term investments

👉 SHORT TERM GOALS
All short-term goals can be categorized into two parameters the tenure of the goal and also the importance of the goal.
When planning, this segmentation between time and importance can be really useful. As a thumb rule, the closer you are to your goals and the more important those goals are the higher should be your allocation to those instruments which are not going to give you a nasty surprise. This would mean that the money you have allocated for goals like your emergency fund, school fees, etc. should be invested or kept in only those instruments which have very little risk

👉 SELECTION CRITERIA FOR SHORT TERM INVESTMENTS
When choosing an investment for your short-term goals, there are three areas to focus on

The safety of capital i.e. the money one puts in should not carry any speculative or unknown risks
Liquidity or more importantly accessibility so one should be able to pull out the money as and when required
Returns - which comes with the ability to earn more than other comparable options

Three points that one should always keep an eye for

When looking at debt fund returns never forget that safety and liquidity have a higher role to play
Never make the mistake of chasing the best-performing fund as more often than not the funds that deliver the highest returns also take in the highest risk
When evaluating returns, always do that on a post-tax basis. Taxes are particularly important when comparing fixed deposits with debt mutual funds .. because both these instruments have a different taxation structure

👉 SETTING UP YOUR SHORT TERM INVESTMENTS
Step 1- Align every single rupee to a goal. This is done by creating specific, measurable, actionable, realistic, and time-bound goals.

Step 2 Allocate the right financial product to each of your short-term goals. For instance, the money allotted to important and immediate goals should be invested only in super safe instruments like a savings account, a fixed deposit, overnight funds, or liquid funds. However, for the other goals which are not that important or are a little into the future then one can explore the slightly longer duration options like an ultra short term fund, a money market fund, a low duration fund.

The framework for short-term investing is the actual selection of funds. Manually incorporate some checks and rules in your selection process

Check 1- looking at the modified duration and the lower that number, the better it is because it means that the scheme is less sensitive to interest rate movements which is what we want in a short term fund

Check 2 ensure that the fund’s average maturity is equal to or lower than the category’s average maturity

Check 3 Look at having a YTM that is close to the category’s average YTM

👉 Resources:
Debt Specific videos:

#ETMONEY​ #shorttermgoals #DebtMutualFunds

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[sachin_]

Everyone speaks about long term investing and goals but never on short term goals and investing avenues. But, short term also is equally necessary, so thank you so much for covering such an important aspect and explaining it so easily. Great job 👌😍

[hareshdesai]

Thank you I have never come across such a informative knowledge on short term investment. I always make it a point to watch your videos.

[arnabroy]

Extremely useful and important video and very very well written and edited...crisp short and to the point.Thank u so much!!

[Rushikeshhome]

That's why we love you. I personally recommend your content to my friends. A red heart ❤️ for you and all your team members. Keep teaching us....

[coleendsouza]

This is the most underrated channel! Kudos to the entire ET money team for putting up such great content without fail

[knayak]

Keeping large money in savings account for emergency is recommended as you get negligible interest. It us better to open a sweep-in account ( or whatever name your bank has given), whereby any excess funds over your specified fund automatically gets used to open a FD. In case of emergency, if there is a shortfall in the SB ac, FD is automatically redeemed instantaneously and money is transferred to your SBac. This way you get the higher interest on your unused money alongwith liquidity for emergency.

[nitinsadana]

If liquidity is not of paramount importance, and during current times of low interest rates, it's a very difficult choice between FD's vs Debt funds considering post tax returns as both are barely able to beat inflation and offer any real returns

This choice becomes more difficult for NRI customers since NRE FD's are tax free compared to potentially taxable captial gains in Debt funds

[shambhvilokre]

the quality you guys offer cant be matched!

[ancientmariner]

Very clear. No double speak . Many thanks

[TheKosenrufu]

Useful to inquisitive and patient mind. Good content mate!!

[anupsharma]

This channel deserves 25 lakh subsbriber...

[fanofkimi]

Thank you so much sir.
Have requested such video few days back. The content is pretty clear and you nailed your points

[neelamvalecha]

Very professional and clear advice. Well done as always you do a good job. !!!

[srijitmajumdar]

Very nicely explained 👍👍 Extremely useful for planning short term goals..

[saurabhkesharwani]

Very nice, and well explained! 👍🏼
Covered all essential points. 👍🏼

[avinashkhopade]

Thnx a lot Sir, for sharing such informative videos. These detailed videos are very helpful for one's successful financial journey!

[mesimple]

Right on point. Can't thank you more on this. Keep bringing such videos

[sharvik-shishu]

Very right time for the video… thank you so much for the video 😊

[ruchita]

Where shall we park extra money after 1st April 2023. FD or debt fund?