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What are the best investment options for 3-6 months?

You can either park your money in liquid funds or ultra short term debt funds


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This old article may have references to outdated tax rules and laws. For up-to-date information on taxation of mutual funds, refer to https://www.valueresearchonline.com/tax/

What are the best investment options for 3-6 months with maximum returns? If invested in equity, will the profits be taxable?
-Janoo Motiani

For a short period of 3 to 6 months, you can either park your money in liquid mutual funds or ultra short term debt mutual funds. Liquid mutual funds usually invest in government securities and certificate of deposits of up to 3 months duration. You can easily enter and exit at any point of time, usually without an exit load. Please note that sometimes the redemption may take around 2 days. These funds have given annual returns of around 4-7% post tax.

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Ultra-short term funds invest in slightly longer term debt instruments with maturity of more than 91 days and less than 1.5 years. They may also levy an exit load for investors who redeem units within a specified period. Equity fund investments attract capital gains tax if redeemed within one year. But we strongly advise you against investing in equity, given your short time horizon. Equity investments are suitable for a time horizon of at least 5 years.

This old article may have references to outdated tax rules and laws. For up-to-date information on taxation of mutual funds, refer to https://www.valueresearchonline.com/tax/

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