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Where Should I Invest To Fund A Vacation After 6 Months?

Adhil Shetty
Image source: Freepik

Q. I have some idle cash lying with me. Are there any short-term investment options that I can consider for this idle cash to grow? Also, I am planning a vacation abroad after six months. Do you think this cash can fund my vacation? — Alka Saxena

A. Most financial advisors almost always talk about long-term saving plans and goals such as retirement and kids’ college education as well as to save for the rainy day. Yet, there are certain things (such as a down payment for your dream car/house, wedding, family international vacation, or your kid’s immediate education costs) that you really want or have to achieve in a short span.

So, why are short-term investments ignored? Mostly because people prefer to handle such expenses on loans or using credit cards. But if you are one of the few who would like to plan for such events, then read on.

There are quite a few instruments to choose from, if you want to go for short-term investments: Fixed Deposits (FDs), Recurring Deposits (RD), Sweep-in FDs, savings account, money market account, gold or silver, company deposits, post office term deposits, liquid funds, and short-term debt terms.

While each of these instruments have their own pros and cons, nevertheless, they may fulfil your short-term monetary goals and requirements.

Furthermore, it is beneficial to remember that post-tax returns should not be overlooked when investing for a short period of time. In all these instruments, the amount of income generated gets added to the total income in that financial year and taxed according to one’s income slab.

Have a question on personal finance? Ping me on Twitter at @adhilshetty with the hashtag #AskAdhil