Fixed-income investments offer stability and predictable returns, making them an essential component of a diversified portfolio. However, the right choice can vary significantly depending on whether you're investing for short, medium, or long term. Understanding how your investment timeframe aligns with various fixed-income products can help you maximise returns while minimising risk, ensuring that your financial goals are met efficiently and effectively.
In this article, we will explore how to choose the right fixed-income investment for you and how Shriram Finance fixed deposits can help you achieve your financial goals.
Key Highlights
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Timeframes for Investment
Here are some timeframes for most of the fixed-income investments:
Ultra Short Term (3-6 months)
If you know you will need your money within the next 3-6 months, your top priorities are liquidity (easy access to your money) and safety (keeping your principal investment secure). Higher returns come with greater risk, so for short-term investments, focus on options that priorities these two factors.
Here’s a table outlining some good ultra-short-term investment choices:
| Investment Option | Returns (per annum) | Features |
| Savings Bank Account | 3-6% | Easy access, but low returns. |
| Fixed Deposits | 4-6% | Guaranteed returns; some penalty for early withdrawal. |
| Ultra-Short-Term Funds/Liquid Funds | 4-6% | Highly liquid; may offer slightly higher returns than savings accounts. |
Short Term (1-2 years)
If you have money you won't need for 1-2 years, you have more flexibility in your investment choices. While liquidity is still important, you can consider options offering slightly higher returns.
Here are some investment options to consider for the short term:
| Investment Option | Returns (per annum) | Features |
| Fixed Deposits | 5%-6% | Guaranteed returns; some penalty for early withdrawal. |
| Short Duration Funds | 5%-6% | Professionally managed portfolio; may offer slightly higher returns than fixed deposits with similar tenure. |
| Corporate Deposits | 5%-6% | May offer higher returns than bank fixed deposits, but depends on the creditworthiness of the company. |
| Arbitrage Funds | 4-6% | Aims to profit from price discrepancies in the market through arbitrage strategies. |
Medium Term (3-5 years)
With a 3-5-year timeframe, you can take on more risk in exchange for the potential of higher returns. It is a good time horizon for investors looking to grow their capital but still want some security.
Here are some investment options suitable for the medium term:
| Investment Option | Returns (per annum) | Features |
| Fixed Deposits | 6-7% | Guaranteed returns; some penalty for early withdrawal. |
| National Savings Certificate (NSC) | 6-7% | Government backed scheme, good returns; interest earned can be reinvested for compounding benefits. |
| Kisan Vikas Patra (KVP) | 6-7% (varies with tenure) | Investment scheme for rural development, attractive returns, flexible maturity options. |
| Senior Citizens Saving Scheme (SCSS) | 7-7.5% | High returns for senior citizens. |
| Corporate Deposits and Bonds | 6-7% | May offer higher returns than bank fixed deposits, but consider the creditworthiness of the company. |
Long Term (6-8 years)
You have the most options for long-term investments (6-8 years or more). You can prioritise high returns and choose investments that may have some market fluctuations but offer the potential for significant growth over time.
Here are some investment options to consider for the long term:
| Investment Option | Returns (per annum) | Features |
| Fixed Deposits | 6%-8% | Guaranteed returns, secure investment, and interest payout options. |
| RBI Savings Bonds | 7%-8% | Issued by RBI, guaranteed returns, lower interest rate risk. |
| Public Provident Fund (PPF) | 7-7.5% | Good returns, long lock-in period (15 years), partial withdrawal allowed after 6th year. |
| Sukanya Samriddhi Yojana (SSY) | 7%-8% | Girl child specific scheme, high returns, long lock-in period (21 years), mature upon girl child turning 21 or her marriage after 18. |
Do you know?
You can ensure your money grows faster than inflation. Use the Shriram Fixed Deposit Interest Calculator to see how much your investment can increase over time. Try now!
Best Fixed Deposit Plans
When it comes to fixed deposits, Shriram Finance understands that your needs are unique. That’s why Shriram offers a variety of online fixed deposit plans to suit your investment goals and preferences.
Here are some of the key benefits of choosing Shriram Fixed Deposits:
Competitive interest rates
Shriram Finance fixed deposits offer attractive interest rates, higher than many other fixed deposit options. These rates can go up to 9.40%* per annum, which includes additional interest benefits of 0.50%* per annum for senior citizens and 0.10%* for women.
Flexible premature withdrawal options
Life can be unpredictable, and Shriram Finance understands that. They offer flexible premature withdrawal options, allowing you to access your funds if needed while minimising penalties, including:
- Lock-in period (First 3 months): No withdrawal permitted except in case of the account holder's death
- Withdrawal between 3-6 months: The principal amount is refundable, but no interest is earned
- Withdrawal after 6 months: You can access your funds, but you'll receive the contracted interest rate minus a penalty of 2-3%, depending on the specific scheme
Bottom Line
Fixed deposits are a valuable tool for risk-averse investors seeking a safe and reliable way to grow their money. By understanding your time horizon and risk tolerance, you can choose the right fixed-income investment option for your needs.
Shriram Finance offers a variety of fixed deposit plans with attractive interest rates, flexibility, and security, making them a great partner for your fixed-income investment journey.
Disclaimer: With regards to deposit taking activity of Shriram Finance Limited (’SFL’), viewers may refer to detailed information and T&C provided in our application form available at downloads. The Company is having a valid Certificate of Registration dated 31st January 2023 issued by the Bank under section 45-IA of the RBI Act. However, the Reserve Bank of India does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.
