Friends, if you have some extra money and need a safe return in 1 year, don’t worry! There are so many options in the market these days that it’s easy to get confused. I checked the latest 2025 data—from bank FDs to mutual funds—and created this post, explaining it simply.
These plans are low-risk, meaning your money will be safe and you’ll earn some interest. Come on, Mukesh, let’s see which plans are best for 1 year. If you’re a beginner, this is the perfect start!
Why Short-Term Investments? Quick and Safe!
Long-term, stocks or SIPs are good, but if you need money within a year—for example, for a vacation or emergency fund—short-term plans are best.
They’re low-risk, have good liquidity (meaning you can withdraw quickly), and can offer returns of 4-8%. Interest rates are stable in 2025, making them good for inflation. Remember, taxes will also be applicable based on the slab. Let’s take a look at the top options.
Top Short-Term Investment Options for 1 Year
Here’s a quick overview—each plan’s risk, return, and why you should choose it.
1. Bank Fixed Deposits (FDs): Safest and Easiest
Get an FD in a bank and earn fixed interest. Rates for one year are 6.5-7.5% at major banks, and you can get 8-9% at small finance banks. For example, you can start with ₹10,000 at HDFC or SBI. There is a penalty for premature withdrawal, but it is safe and secure because it is government-backed.
Pros: Guaranteed returns, no market risk.
Cons: Slightly lower returns than mutual funds.
2. Post Office Time Deposits: Government Guarantee, Zero Tension
Go to the post office and make a one-year deposit – interest is up to 6.9% in 2025. Minimum ₹1,000, maximum no limit. Super popular in rural areas because it’s backed by India Post.
Pros: Absolutely safe, tax benefits under 80C.
Cons: Requires a branch visit, not easy online.
3. Liquid Mutual Funds: Slightly Higher Returns, Easy Withdrawal
These funds invest in short-term debt, with expected returns of 6-7.5%. Like the Invesco India Liquid Fund or HDFC Liquid Fund. Start with ₹1,000 and redeem within 1-2 days.
Pros: High liquidity, better than a savings account.
Cons: Market-linked, slightly low risk.
4. Ultra Short-Term Debt Funds: Balanced and Quick
Best for 1-3 months, but can be held for up to 1 year. Returns 7-7.5%, like PGIM India Ultra Short Duration Fund. Invest in Groww or Zerodha.
Pros: Good for parking money, tax-efficient if held for 1+ years.
Cons: Slightly fluctuate with interest rate changes.
5. Arbitrage Funds: Equity-like Tax Benefits, Low Risk
Stock market arbitrage returns 6-8%, taxed as equity (15% short-term). Good for 1 year if you’re in a high tax bracket.
Pros: Tax-saving, stable returns.
Cons: Requires some market timing.
And yes, you can also try gold ETFs – 8-10% potential in 1 year, but volatile. Diversify, like ₹50k in FDs, ₹30k in liquid funds.
Comparison Table: Which Plan to Choose?
| Features | Average Return (2025) | Risk Level | Minimum Investment | Ease of Withdrawal |
|---|---|---|---|---|
| Bank FD | 6.5-7.5% | Very Low | ₹1,000 | After 1 Year (with Penalty) |
| Post Office Deposit | 6.9% | Very Low | ₹1,000 | After 6 Months |
| Liquid Funds | 6-7.5% | Less | ₹1,000 | 1-2 Days |
| Ultra Short Funds | 7-7.5% | Less | ₹5,000 | Instant |
| Arbitrage Funds | 6-8% | Less | ₹1,000 | 2-3 Days |
This table clearly shows that if you want zero risk, choose FD or Post Office funds for slightly higher returns.
Pros and Cons Overall
Pros:
- Quick returns, low risk – money will be safe.
- High liquidity, you can withdraw in an emergency.
- Rates are good in 2025, you can beat inflation.
- Tax benefits like 80C deduction on FDs.
Cons:
- Returns are limited (hard to exceed 8%), not like stocks.
- Gains will be taxed according to your tax slab.
- Penalty or loss on premature exit.
- Funds fluctuate slightly due to market changes.
Conclusion
Friends, for the best short-term investment for 1 year, start with FDs or Post Office – safe and guaranteed. If you can take a little risk, try liquid/ultra short funds; you’ll get 7%+ returns.
The economy is stable in 2025, so start now! Choose based on your goals and consult with a financial advisor. Let us know in the comments which plan you’d try – FDs or funds? And yes, this is just information; do your research before investing!
