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Online Investment Plan for 1 Year in India

When you are trying to save or invest money over the short term, you may have to look out for a number of investment options to find a suitable investment plan for your needs. The fact is that, while there are numerous short-term investment plans in the market, it is your risk profile and your investment goals that will decide which investment is right for you.
 

Though one-year online investment plans are not meant for everyone, many investors need to meet some short-term financial obligations in a year’s time. Hence, here are some short-term investment options as listed below.
 

One-year Investment Plans in India
 
  • Bank Fixed Deposit (FD)

    Fixed Deposits are considered to be one of the safest online short-term investments options. If you are already operating your bank account online, then you can simply start your online FD account for a period of one year. The investment amount will have to be paid in a lump sum, and since you are investing for the short term, you can easily and safely deposit a large amount of funds.

    You have an option of saving the funds for a period of 6, 9 or 12 months as a 1-year investment plan and renewing the deposit on maturity if you do not need the money immediately.

    The rate of interest offered by banks for a period of 12 months or more is 6.5% per annum, and if you are a senior citizen, you get an additional rate of interest of 0.5% per annum. Subject to your tax* slab and your income, the interest on your FD can be eligible for tax* benefits.

  • Recurring Deposit

    Recurring Deposits or RDs need to be made at regular intervals over the investment tenure; however, there is a maturity fee that needs to be paid as a lump sum. Many banks that have online facilities also enable you to open your RD account online in a swift and easy manner.

    You can have an RD for a tenure of a single year to save up for personal short-term goals such as wanting to enjoy a vacation with your loved ones or making a minor but expensive purchase such as a wedding gift and so on. Each month, you can invest a specific sum of money over the next year, which can be used on maturity. There are also Recurring Deposits that you can open for a period of 3 months or for 6 months.

    If you choose to close your RD account within the first month of the investment, then you will not be able to earn the interest on the savings.

  • Post Office Term Deposit

    A Post Office Term Deposit can be made for a tenure of 1-5 years, making it one of the safest investment plans for one year. If you are a post-office account holder, then your internet banking facility is likely to offer a Post Office Term Deposit online. These deposits can be made in a post office for the selected tenure of your choice – for one year, in case you are looking for a one-year investment plan.

    The interest on these deposits is paid out annually, and you can withdraw money from the account prematurely after a period of 6 months. This scheme offers fixed returns on your investment; the interest (taxable) for a 12-month or 1-year investment will be calculated on a quarterly basis but will be paid out annually.

    Currently, Post Office deposits offer an interest rate of 6.6% to 7.4% for investments made for a 1-5-year tenure.

  • Fixed Maturity Plans

    Fixed Maturity Plans offer a flexible tenure of 1 month to 5 years if you are seeking a 1-year investment option. The benefit of investing in this scheme is that the investor can earn constant returns on their portfolio. However, do note that the liquidity of these funds is quite less, and so only if you are sure of making a one-year investment in these funds should you proceed to lock in the investment.

    The other benefit of Fixed Maturity Plans is that the returns are consistent but not fixed for a short investment tenure such as one year, and they may also be quite consistent. That way, your investment portfolio can be protected against market movements.

    Being a mutual fund, the short-term capital gains within a period of 36 months will be taxed, while the long-term capital gains made after 36 months will attract a tax* rate of 20% after an indexation benefit.

  • Arbitrage Mutual Funds

    Arbitrage mutual funds are hybrid mutual funds that buy and sell funds in different markets and benefit from varying prices to generate profits. If you have an online broker, you can start investing in arbitrage mutual funds online and maintain your investment for a period of 12 months. These are open-ended funds and are considered to carry some amount of risk; however, arbitrage mutual funds qualify for some tax* benefits.

    Therefore, it is important that you only invest in these funds with sound advice from your financial advisor and only if your risk profile is up to the market. These funds are better suited for medium to more risk investors seeking rapid profits.

    Being open-ended mutual funds, these funds offer more liquidity since the units need to be purchased and sold often. You can expect a return of about 6% per annum on these funds; however, the returns may not be consistent.

  • Debt Mutual Funds

    Debt mutual funds are less-risk mutual funds that can be started online and offer fixed income along with capital appreciation. While they are still market-linked funds, they carry much lesser risks than equity funds. You can earn returns of up to 7% per annum on your debt mutual funds and choose an investment tenure of 6-12 months by choosing a low-duration fund. If you select a money market fund, your investment will have a maturity of one year.

    While debt mutual funds are surely a good option for a one-year investment plan, you should be aware of how these funds are taxed. If you make profits on your fund within a period of 36 months, these profits are added to your income and taxed accordingly. The profits made after a period of 36 months will be taxed at 20% but with an indexation benefit.
     
Conclusion
 

As we can see above, there are a number of one-year investment plans to choose from. Hence, the common misconception that investment plans for such a short tenure do not exist is wrong. Moreover, it is also not correct to assume that all short-term investment plans are risky and do not offer assured returns on the investment. However, you should choose your investment options based on how much you can invest for one year.


L&C/Advt/2023/Jan/0061

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Frequently Asked Questions

Are online investment plans safe?

Yes, online investment plans are considered to be safe since the entity offering the facility, such as banks, ensure that there are no security breaches. However, as an investor, it is also your responsibility not to share passwords and sensitive information regarding online accounts with anyone.

How do I choose an online investment plan?

The online investment plan you select should be aligned with your investment goals, and you should be able to understand your risk profile before investing in the plan. Apart from mutual funds, if you are opting for bank deposits and the like, there are no risks to be worried about. Here, your only aim is to pick one or two one-year investment plans that will give you the desired returns.

Disclaimer

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and does not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.