Best Mutual Funds for Short Term Investment 2024 (2024)

Mutual funds are investments that allow you to pool your money with the money of other investors and place it in a diversified portfolio of assets. This can include stocks, bonds, real estate, commodities, or even currencies.

The goal is to provide investors with a way to earn returns without investing in individual stocks and bonds—and without worrying about losing money if one investment goes sour.

The downside is that while you don't have to worry about losing money on individual investments, you also don't have any control over which ones your mutual fund company chooses. This means that if a stock bubble bursts or a commodity crash, it can hurt you too—you'll feel it less acutely than someone who invested directly in those areas.

Mutual funds for short-term investments are designed to provide investors with an easy way to invest in the stock market without spending time selecting individual stocks or bonds. Instead, the fund manager will choose these securities based on the fund's objective and risk tolerance.

Short-term mutual funds typically hold stocks with an average holding period of one year or less. As a result, they generally have low turnover rates, so they don’t buy and sell securities too frequently.

This strategy allows them to minimize transaction costs while generating higher returns than longer-term funds because they don’t have as much invested in illiquid assets like real estate or private equity investments, which take more time to sell off when the market goes down (and vice versa).

Best Mutual Funds In India For Short Term

Short-term investments in India are an excellent option for those who want to invest their money and expect to receive it back within three years.

Liquid funds are one of the most popular short-term investment options in India. Liquid funds invest in debt instruments such as government bonds, corporate bonds, and commercial papers. They offer high liquidity, low risk, and relatively high returns compared to other short-term investment options.

Ultra Short Term Funds invest in similar instruments, but they can be held for less than 90 days.

The best short term mutual funds India invest in debt instruments with an average maturity of less than one year. They are not as liquid as liquid funds and have a higher risk, but they offer slightly higher returns than ultra-short-term funds.

Also, Liquid funds are a popular investment vehicle that offers liquidity. Liquid funds are top-rated, with investors who want to park their money for short periods. Liquid funds are also called money market mutual funds. Liquid funds have a low-risk profile and invest in short-term debt securities such as government bonds, commercial paper, certificates of deposits (CDs), treasury bills, and bank deposits.

The average maturity period for liquid fund investments is one year or less. In addition, investors can typically redeem their shares daily, making liquid funds an ideal investment choice for those who want to park their money for short periods without having to worry about being locked into long-term investments or losing out on potential gains from market volatility.

The best liquid funds will also have low fees, as well as a diverse range of underlying assets so that they can weather economic downturns better than others would be able to do so alone (for example, if one sector experiences poor performance, then others might still be doing well).

Short Term Funds have become the most preferred option for investors, as they offer many benefits and are relatively easy to manage. These funds are ideal for those who need to invest money for short-term goals or want to keep their money liquid.

The markets have been seeing a lot of volatility and uncertainty over the last few months, so choosing your investments carefully is essential. Short-term mutual funds are a great option if you're looking for a way to invest that will be safe but still allow you to make money quickly.

Here is a list of the best short-term mutual funds in India that you can invest in for the following year.

Best Mutual Funds for Short-Term Investment 2024

If you are searching for which mutual fund is best for short term, here is a list of the Best Mutual Funds to Invest for Short Term-

Factors to Consider Before Investing in Mutual Funds for Short Term

There are several factors to consider before making a short-term investment and deciding the best mutual fund to invest in India for six months or less.

• Return on Investment (ROI)

The return on investment you can expect from your short-term investment is a crucial factor to consider. It will be essential to understand how much you can expect to make from the investment and how quickly that money could be returned.

This is especially important if other factors could delay your return, such as the need for approvals or delays in construction.

• Risk Tolerance

An essential aspect of any short-term investment is risk tolerance. If you have a high level of risk tolerance, you may be able to accept less return on your investment than someone with a lower level of risk tolerance would require.

However, even those with lower risk tolerance levels should be able to find opportunities that provide some return on their investment without overexposing them to risk.

• Investment Period

For any investment to be successful, it must have an end date and a plan for what happens once that date arrives.

This means that even if an investor has no plans to sell their asset after their initial purchase, they should still set an expected timeframe within which they will sell or close out their position to get the best returns.

• Liquidity

The first factor to consider before investing in India is liquidity. This refers to how easy it is to get your money out of the investment without losing too much value.

If you're planning on getting out of your investments quickly, you'll want to ensure that there are plenty of buyers for your shares and that selling them doesn't take too long or cost too much money.

• Taxation

Taxes can be a significant factor when making an investment decision. You need to know how much tax will be taken out of the profits from your investment before deciding if it is worth the risk of losing money on an investment with low returns.

• Inflation Rate

Inflation rates can change over time and affect the value of your assets and currency. So, you must ensure that inflation doesn't eat away at your profits before deciding if an investment is worth buying or selling at any given time during its lifecycle.

In case you want to invest some idle money for emergency usage and not for a general requirement, mutual funds also have products for this. So all you need to do is to study your investment requirements.

There can be variations within the short-term category as well. There are also short-term mutual funds for six months and 2-3 years. There can be different kinds of short-term investments with varying risk types. Therefore, this can never be overstated but understanding your investor profile and risk appetite is the key to making suitable investments.

Best Mutual Funds for Short-Term Investments 2024: Overview

Here are a few mutual funds for short term goals-

1) Aditya Birla Sun Life Money Manager Fund - Direct Plan-Growth

Aditya Birla Sun Life Money Manager Fund Direct-Growth is a Debt Mutual Fund Scheme launched by Aditya Birla Sun Life Mutual Fund.

This Scheme was made available to investors on 23 Dec 1994. The Scheme seeks to generate regular income through investment in a portfolio comprising money market instruments.

2) Bank of India Short-Term Income Fund Direct Growth

Bank of India Short Term Income Fund Direct Growth is a Debt Mutual Fund Scheme introduced by Bank of India Mutual Fund. It was made available for investments on 31 Mar 2008.

The scheme aims to generate substantial returns by investing in money and debt market instruments.

3) Quant Active Fund Growth

Quant Active Fund Direct-Growth is an Equity Mutual Fund Scheme launched by Quant Mutual Fund. This Scheme was made available to investors on 15 Apr 1996.

The Scheme aims to provide long-term capital appreciation and generate income with a diversified portfolio of Large Cap, Mid Cap, and Small Cap companies.

4) Nippon India Short-Term Fund Direct Growth

Nippon India Short Term Fund Direct-Growth is a Debt Mutual Fund Scheme. It was introduced for investments on 30 Jun 1995.

It has often been found to be a consistent performer. It seeks to generate stable returns with a short-term investment horizon by investing in the money market and debt market instruments.

5) Edelweiss Banking and PSU Debt Fund - Direct Plan-Growth

Edelweiss Banking and PSU Debt Fund Direct-Growth is a Debt Mutual Fund Scheme launched by Edelweiss Mutual Fund. This Scheme was made available to investors on 30 Apr 2008.

The Scheme seeks to generate income by investing predominantly in a portfolio of Debt Securities and Money Market Instruments issued by banks, PSUs, Public Financial Institutions, entities majorly owned by Central and State Governments, and Municipal Bonds.

Conclusion

Are you looking for a short-term investment? If yes, then mutual funds are the best option for you. Mutual funds offer instant diversification to investors and provide the convenience of investing in small amounts regularly. This list of the best mutual fund to invest in the short termmay help you while investing.

Many people think investing in a mutual fund is risky because they don’t understand how it works properly. But if you look at it carefully, you will find that investing in a mutual fund is not only easy but also safe if done correctly.