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Three months is a very short time to make any money from investments. But don’t be discouraged! There are options if you know how to pick them well.
If you want to invest in mutual funds to get a good return, you have to commit for more time. on the other hand, if you choose the stock market, the risk associated is very high!
If you’re one who doesn’t like risking capital, but would like to get a decent return, then a short-term fixed deposit is your best bet.
You can invest for as little as 7 days and earn a decent rate of interest. Usually, people who invest in the short-term have large sums of money. They want to earn interest on money that is lying idle for a few days to a few months.
When you opt for a shorter tenure on fixed deposit (FD), the interest rate offered by the bank is usually low.
If you want to invest in an FD for 3 months, you can get a decent rate of return. For instance, AU Bank offers 6.90% for regular citizens on their FD. If you’re a senior citizen, you can get 7.40% p.a. on your investment for 3 months.
Let’s take an example to see how much you could make from a 3-month fixed deposit.
Let’s say you invest Rs.5 lakh for 3 months at the rate of 6.90% p.a. We must take into consideration the compounding frequency, that means how often is interest calculated and given on the deposit. AU Bank compounds interest once every year (annual basis).
In three months, you can earn Rs.8,410.
If you invest a higher amount, say Rs.10 lakhs under the same circumstances, you would earn Rs.16,820
That is a sizeable return for an investment with no risk… and in just 3 months!
A short-term FD is fruitful if you have large sums of money. If you invest Rs.10,000, you will make Rs.168 in 3 months.
But nonetheless, since there are zero risks when investing in an FD, if you want to keep your money safe and earn a little interest on it, an FD is the best option!
If you want to calculate interest on your fixed deposit, it is very easy. You can go online and find any FD calculator through Google or any other search engine. Once you get a calculator, you need to enter your principal, rate of interest, period, and compounding frequency.
In our example, this would be:
Principal - Rs.5,00,000
Interest - 6.90%
Period - 3 months
Frequency - Annually
Once you click on calculate, the calculator will tell you how much you would get on maturity and how much interest you will earn.
Fixed Deposits are a time-tested investment recommended by all! If you have no appetite for risk, FDs are the way to go! Now that you know how much you can earn, open an FD online easily and watch your money grow!