If you’re looking for high returns with a short-term investment horizon (1-3 years), here are the best options:
1. Fixed Deposits (FDs) in Small Finance Banks 🏦
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Returns: 7%-9% per annum
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Tenure: 6 months to 3 years
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Risk: Very Low (Up to ₹5 lakh insured by DICGC)
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Best for: Safe & predictable returns
2. Debt Mutual Funds 📊
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Types: Short-duration, Ultra Short-term & Liquid Funds
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Returns: 6%-8% per annum
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Risk: Low (depends on fund type)
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Lock-in: No lock-in (ideal for 1-3 years)
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Best for: Higher returns than FDs with liquidity
3. Corporate Fixed Deposits 🏢
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Returns: 8%-10% per annum
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Tenure: 1-3 years
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Risk: Medium (check company rating – AAA-rated are safest)
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Best for: Fixed returns with better interest than banks
4. Recurring Deposits (RDs) 💰
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Returns: 6%-7% per annum
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Tenure: 6 months to 3 years
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Risk: Very Low (offered by banks & post offices)
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Best for: Disciplined savings with guaranteed returns
5. Post Office Time Deposit (POTD) 📬
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Returns: 6.9%-7.5% per annum
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Tenure: 1-3 years
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Risk: Zero (Government-backed)
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Best for: Safe investment with fixed returns
6. Short-Term Bond Funds 🏛
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Returns: 7%-9% per annum
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Tenure: 6 months to 3 years
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Risk: Low (lower risk than equity funds)
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Best for: Parking funds with better returns than FDs
7. Ultra Short-Term & Liquid Mutual Funds 💸
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Returns: 5%-7% per annum
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Tenure: 3 months to 1 year
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Risk: Very Low (invests in treasury bills & bonds)
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Best for: Emergency funds & quick withdrawals
8. Arbitrage Mutual Funds 🔄
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Returns: 6%-8% per annum
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Tenure: 1 year (for tax efficiency)
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Risk: Low (less volatile than equity funds)
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Best for: Safe, tax-efficient short-term investment
9. Sovereign Gold Bonds (SGBs) – Short Holding 🏆
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Returns: Gold price appreciation + 2.5% fixed interest
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Tenure: 8 years (but can exit after 5 years)
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Risk: Medium (gold price fluctuations)
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Best for: Hedge against inflation with safe returns
10. High-Yield Savings Accounts & Sweep-In FDs 🔄
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Returns: 4%-7% per annum
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Tenure: No fixed tenure (liquid savings)
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Risk: Very Low
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Best for: Parking funds with better interest than regular savings
Best Picks Based on Your Needs
✔ For highest safety & returns: Small Finance Bank FDs, POTD
✔ For liquidity & returns: Ultra Short-Term Funds, Liquid Funds
✔ For higher-than-FD returns: Debt Mutual Funds, Corporate FDs
✔ For tax efficiency & short-term: Arbitrage Funds, SGBs