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Q I want to tar­get short-term in­vest­ment op­tions, which pro­vide a good re­turn, and are sta­ble. What are my op­tions?

AShort-term in­vest­ments are any as­sets that are pro­jected to per­ish or to be hon­oured within the pro­gres­sion of one-three years. The ob­jec­tive of this form of as­set is to safe­guard prin­ci­pal with low-risk in­vest­ments. How­ever, with low risk, the yield on short-term funds is quite abridged.

Be­fore in­vest­ing for the short term you need to re­alise if there is any high-in­ter­est-bear­ing loan out­stand­ing in your records, like credit card or per­sonal loan, the

re­turns on in­vest­ment might be less com­pared to bor­row­ing costs. It’s ad­vis­able to set­tle the debt be­fore ven­tur­ing into in­vest­ment strate­gies.

There are a few di­ver­si­fied in­vest­ment op­por­tu­ni­ties for short-term re­turns. You could look to com­bine mul­ti­ple op­tions to mit­i­gate risk and achieve the tar­get goal. Sav­ings or re­cur­ring

ac­counts are the low­est lu­cra­tive type of short-term in­vest­ments. It is ef­fort­lessly man­age­able and of­fers small prof­its. How­ever, with the re­cur­ring ac­count, you can de­posit an equated amount ev­ery month for a spec­i­fied pe­riod to achieve the goal. They must not be used to stock­pile cash over an ex­tended pe­riod.

Cer­tifi­cates of de­posit are a short-term in­vest­ment op­tion where you in­vest money for a def­i­nite interval of time or in re­turn for a higher yield. The time pe­riod could be from three months to as long as five years.

Money mar­ket funds are usu­ally liq­uid-like sav­ings ac­counts, but they of­fer a su­pe­rior yield. The hitch is that they are not fed­er­ally pro­tected, mak­ing them a higher-risk ve­hi­cle for short-term sav­ings. Na­tional Bonds or Sukuk

Bonds are se­cu­ri­ties pro­vid­ing flex­i­ble short-term in­vest­ment terms for min­i­mum four weeks.

Un­der­stand the wide range of in­vest­ment so­lu­tions as per your dis­pos­able in­come ra­tio, and in­vest the money to work with the right yield.

DHIREN GUPTA, man­ag­ing di­rec­tor of 4C Mort­gage Con­sul­tancy, is a fi­nan­cial ex­pert

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