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Best Investment Plans for 1 Year

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In 2023, the world of finance has seen a seismic shift, with more individuals than ever before prioritising investment as a foundation of their financial strategies. The lure of the best investment plan for 1 year has become particularly appealing to many.

Some are looking for ways to maximise returns in a volatile economy, while others might be saving for a short-term goal or simply wanting to dip their toes into the investment waters without committing for the long haul.

Plans for such a short term, often referred to as investment plans for 1 year, offer a blend of moderate risk and decent returns. For those searching for the best investment for 1 year, there's good news in terms of the variety of available options!

This article will shed light on the short term investment plans for 1 year that stand out in the current financial landscape, elaborating on their key features and benefits.

Why Investing in Short Term Investment Plans for 1 Year is a Good Move?

In the rapidly evolving financial world of 2023, diversifying one's portfolio is crucial. Short-term investments, particularly the best investment plan for 1 year, can be an ideal choice for many.

Let's dive in to understand the appeal behind this move -

  • Quick Returns: For those who don't want their money tied up for extended periods, a 1 year investment plan is ideal. It allows investors to gain returns faster than longer-term commitments.
  • Suitable for Beginners: New to investing? Investment plans for 1 year can be a great starting point. They offer a learning curve without overwhelming new investors with long-term obligations.
  • Flexibility: Short-term investments typically offer more liquidity. Simply put, you can cash out on your plan if required, making the investment plan for 1 year adaptable to sudden financial needs.
  • Diversification: For seasoned investors, short-term plans can be a way to diversify their portfolios. Having a mix of both long-term and short term investment plans can provide a balance against market volatility.
  • Specific Goals: Got a short-term objective like an upcoming holiday or a wedding? The best investment plan for 1 year can be the right route to quickly grow your savings for such specific events.
  • Lower Prolonged Market Risk: While all investments carry some risk, a 1 year investment plan exposes your capital to market uncertainties for a shorter duration, potentially reducing prolonged market risks.

Investment Plan

Best Investment Plans for 1 Year

Let’s dive deep into some of the best investment plans for 1 year that provide a blend of security, flexibility, and potential returns -

  • Bank Fixed Deposit (FD)

Often regarded as one of the most trusted investment avenues, bank fixed deposits offer a secure environment for your money. Predominantly, people opt for government-sector banks, which ensure higher safety due to governmental backing.

With the fixed interest rate for the year, FDs give investors peace of mind knowing precisely what return they will receive upon maturity.

  • Recurring Deposit (RD)

A recurring deposit allows for systematic savings, where investors contribute a fixed sum at regular intervals. Allowing flexibility, most banks now offer easy online account setup for RDs. The lump-sum maturity amount includes both the principal and the interest earned, making it a disciplined savings mechanism with assured returns.

  • Post Office Term Deposits

A reliable and age-old investment, post office term deposits offer interest rates that are often on par with banks. With the backing of the government, they assure safety alongside decent returns. Investing in a post office term deposit for one year can provide a combination of reliability and financial growth.

  • Fixed Maturity Plans (FMPs)

These are close-ended debt funds with a fixed maturity date. Designed to offer predictable returns, FMPs can be an alternative to FDs. While the return isn't guaranteed like an FD, it's typically aligned with prevailing market rates, potentially offering higher yields.

  • Arbitrage Mutual Funds

These funds capitalise on price differentials in different markets such as buying in the stock market and selling in the futures. For those who seek equity-like returns but with lower volatility, arbitrage mutual funds can be a choice. They often offer decent returns, especially in volatile markets.

  • Debt Mutual Funds

Debt mutual funds primarily facilitate investment in fixed-interest-generating securities like corporate bonds, government securities, and money market instruments. For those seeking a diversified investment avenue that provides higher returns than traditional savings accounts and relatively lower risk than equities, Debt Mutual Funds can be a go-to.

Features and Benefits of Best Investment Plans for 1 Year

Here's a breakdown of some of the best investment plans for 1 year -

Best Investment Plans for 1 Year Features and Benefits
Bank Fixed Deposit (FD)
  • Safest one-time investment, especially with government sector banks
  • Flexible tenures: 6, 9, 12 months or more 
  • Option to renew upon maturity
Recurring Deposit
  • Deposits made at regular intervals 
  • Suitable for short-term goals: 3, 6, or 12 months
  • Minimum lock-in of one month
  • Interest rates are usually similar to FDs 
Post Office Term Deposit
  • Considered a very safe investment 
  • Range from 1 to 5 years tenure 
  • Annual interest payouts
  • Premature withdrawals allowed after six months
Fixed Maturity Plans
  • Close-ended debt mutual funds with varying tenures from 1 month to 5 years
  • Limited liquidity
  • Consistent yields, though not guaranteed 
Arbitrage Mutual Funds
  • Hybrid mutual funds leveraging price differences in different markets
  • Open-ended funds with high liquidity 
Debt Mutual Funds
  • Suitable for daily income without high risk 
  • Quick redemption of units ensures high liquidity

Investment Plan

Points to Be Considered Before Investing in Short Term Investment Plans for 1 Year

Listed below are some of the essential points you should weigh before diving into short term investment plans and getting the best investment plan for 1 year -

  • Risk Profile: Typically, short-term investments pose a lower risk than long-term ones due to the brief maturity period. However, even within this lower-risk bracket, some options might be safer than others. For instance, while treasury bills (T-bills) are generally safer regarding returns, debt funds might carry slightly more risk.
  • Associated Costs: Every investment has fees or charges tied to it, be it brokerage, account maintenance, or transaction fees. Before choosing the best investment for 1 year, make sure that you're aware of any costs that might eat into your returns.
  • Liquidity: One of the most significant advantages of short-term investments is their high liquidity. This means you can quickly convert your investment into cash without incurring significant losses. For example, treasury bills can be sold at their market value whenever the securities market is open. It's essential to gauge the liquidity of any 1 year investment plan you're considering.
  • Expected Returns: Gauge the potential returns of the investment plan for 1 year you're eyeing. While short-term investments might offer quick gains, it's essential to assess if the expected returns align with your financial goals.
  • Diversification: A notable strength of short-term investments is the diversification that they provide. They allow investors the flexibility to shuffle and redirect their investments as needed. Since your funds aren't locked in as with long-term plans, you can even reinvest returns in other avenues.
  • Flexibility: This feature goes hand in hand with diversification. As short-term investments typically involve smaller amounts than their long-term counterparts, investors enjoy the freedom to allocate additional funds elsewhere. 

This aspect of short-term investments ensures you're not putting all your eggs in one basket, which can be crucial for building a good and diversified portfolio.

To Sum Up

The allure of the best investment plans for 1 year is evident, given their blend of risk and reward. Whether you're an investment newbie or a seasoned player seeking to diversify, a 1 year investment plan can be a strategic move. Such plans offer the dual benefit of potential returns and the flexibility to pivot if needed.

Remember, the best investment for 1 year for one might not be the same for another. Your financial goals, risk tolerance, and market understanding will guide your choice. Always perform thorough research, perhaps consult a financial advisor, and ensure you're making informed decisions.

The journey towards financial growth is an ongoing one. With the right short-term investments, you can take confident strides towards your goals.

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