I was trying to find ways for short term investments.
As I am 20 years old, I do have long term goals but also short term goals. But I don’t want to enter trading and all as I don’t wanna take that much of risk. I want to invest for 3-4 months for around 7-8% return. Is it possible?
I came across short term mutual funds, corporate funds etc. Just wanted to know if any one is practically investing in these things, if yes then how much risk is there and is the return good enough?
You can directly place bid in the primary market of the corporate bonds, through BSE Direct platform. You can expect the coupon rate of 7.5%-10% per annum based on the investment horizon and interest payment cycle.
You can buy the corporate bonds from secondary market as well.
However, corporate bonds can mature only after one year. There is another debt instrument- commercial papers, which is almost the same as corporate bond but with maturity period less than one year. But currently in India, you can not directly invest into commercial papers. You can only invest into it through debt mutual funds.
In debt mutual fund, if you want to lend money to a corporate, there are two most popular options: 1. Corporate Bond Fund and 2. Credit Risk Fund. Corporate Bond Fund does not have any exit load, but there is some exit load in Credit Risk Fund if you sell your units before one year.
PS. Check credit ratings of the fund before you invest in it. Consider assessing 3 risks: liquidity risk, credit risk and interest rate risk.
Thanks for the reply.
I can invest in these using Coin by Zerodha right?
Also does short term mutual work same as these?
No, short term/ duration debt funds are theoretically different. Check out exact definitions from the SEBI for all the categories here.
Manytimes AMCs label the mutual fund differently (eg. they call money market fund as savings fund, etc), in that case, it is advisable to refer definition given in the factsheet.
Okay, Thanks.