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Which Fixed-Income Investment Is Best for You Is Determined by Your Time Scale

Posted: 25th January, 2022

Updated: 8th February, 2023

Written by -


Investing is a long-term game. The one who stays longer earns higher. However, not everyone is there for the long term. Needs may vary, so do the goals of investing. Therefore, while one may invest for retirement, another may just be looking to park his idle funds for a short duration until he needs them again. Consequently, it can be said that which fixed-income investment is best for you is determined by your time scale as options are many like fixed deposits, PPF, bonds, etc. Let's look at the different time horizons and which investments best suit them.

Ultra Short Term (3-6 months)

If you want to stay invested only for 3-6 months, you must focus on the liquidity and safety of your capital. Returns are secondary for a short duration as higher returns demand higher risk. Therefore, you can consider the following avenues for 3-6 months investment tenure:

Investment Avenue Returns (per annum) Tenure
Savings Bank Account 3-6% NA
Fixed deposits 4-6% Selected Tenure
Ultra-Short-term funds or liquid funds 4-6% NA

Short Term (1-2 years)

If you have idle funds that won't be needed for the next one to two years, it's better to invest than lose its value against inflation. Here, along with liquidity and safety, returns will play a role in your investment decision. Therefore, the following investment avenues are available to park your funds:

Investment Avenue Returns (per annum) Tenure
Fixed deposits 5%-6% Selected Tenure
Short Duration Funds 5%-6% Mostly NA
Corporate Deposits Depends upon the deposit NA

Arbitrage Funds


Mostly NA

Medium Term (3-5 years)

This is an excellent time to grow your investments. Here, investors can select a little riskier instrument, enough to keep the capital intact while magnifying the returns. The options for investment increase as you increase the time horizon. If you are willing to go for five years, you can also go for government securities. Following is the list of instruments that can provide good returns alongside the safety of your capital.

Investment Avenue Returns (per annum) Tenure
Fixed deposits 6-7% Selected Tenure
National Savings Certificate 6-7% 5 years
Kisan Vikas Patra 6-7% (Vary with tenure) 2.5 years
Senior Citizens Saving Scheme 7-7.5% 5 years
Corporate Deposits 6-7% Mostly NA
Bonds Depends upon the bond Depends upon the bond
PPF 7-7.5% 5 years with maturity at 15 years

Long Term (6-8 years)

If you want to go for 6-8 years of investment, then the options are many. The selection should primarily be based on the returns provided. Most people prefer such long-term investments if idle capital is not required soon. Hence, the lock-in period is not a major criterion to be considered for such long-term investments. The mantra is, invest and forget! Following are the major avenues for such a long-term investment horizon:

Investment Avenue Returns (per annum) Tenure
Fixed deposits 6%-8% Selected Tenure
Public Provident Fund 7%-7.5% 5 years with maturity at 15 years
RBI Saving Bonds 7%-8% 3 years with maturity at 6 years
Sukanya Samriddhi Yojana 7%-8% Till the marriage of girl child after 18 years or 21 years
Bonds Depends upon the bond Depends upon the bond


While the investment options are many depending upon the time horizon, the notable point is that fixed deposits have remained constant for all the time horizons. This is because fixed deposits provide the option to invest for multiple tenures. There may be slight variation in the returns for different time horizons, but the returns are fixed and guaranteed. The safety of your capital is assured with fixed deposits. Apart from options in time horizon, fixed deposits are of two different types:

  1. 1. Cumulative Fixed deposits: Cumulative fixed deposits accumulate interest over the tenure of the deposit. The interest is paid along with the principal until which it compounds. That means you earn interest over your principal and interest amount. It is suitable for those investors looking to grow their investment value significantly and crave compounding benefits over the long run.
  2. 2. Non-cumulative Fixed deposits: Non-cumulative fixed deposits pay out interest as per the deposit terms. Payouts may be monthly, quarterly, semi-annually, or annually. Investors primarily prefer this option to generate passive income over the investment tenure.

Best Fixed Deposit Plans

As fixed deposits are the preferred option for fixed income-generating instruments, investors always go for the best investment plans. Shriram Finance provides fixed deposits with the most favorable terms, keeping investors' needs and preferences in mind. Some of the key benefits of investing with Shriram Finance include:

  1. 1. Better Returns:Shriram Finance Fixed Deposit offers better returns than mostfixed depositsThe fixed deposit interest rates may go up to 9.05%* p.a. inclusive of the special interest benefit of 0.50%* p.a. for senior citizens and 0.10%* p.a. for women depositors.
  2. 2. Flexible Premature Withdrawals Options: Sometimes, situations may arise warranting premature withdrawal of fixed deposits. In most fixed deposit schemes, premature withdrawal attracts penalties to the investors. However, Shriram Finance, keeping in mind the uncertainties of life, has provided flexible premature withdrawal options to the investors:
    1. 1. The first three months are the lock-in period where repayment will be made only in case of the holder's death.
    2. 2. Withdrawal can be made between 3-6 months of deposit. However, the investor will have to forego the interest.
    3. 3. Withdrawals are made after six months but before maturity will provide the investor with the specified interest less 2%/3% as per the scheme.
  3. 3. Flexible Payouts: Payouts have been kept flexible at investors' discretion to ensure the regularity of the cash flows. Payouts are done monthly, quarterly, semi-annually, and annually.
  4. 4. Rating: Shriram Unnati FD is accredited with [ICRA]AA+ (Stable)” by ICRA and "IND AA+/Stable" by India Ratings and Research. Hence, your deposits are safe with us!

Bottom Line

Fixed deposits have been instrumental for risk-averse investors looking towards moderate returns, alongside the safety of their capital. It has been a significant source of passive income for numerous investors, especially senior citizens. Some of them solely rely on the interest received from fixed deposits to meet all their needs. Nowadays, online fixed deposits can be availed through the website easily. If you are looking to invest in fixed deposits with moderate to high returns, then you can rely on Shriram Finance as your fixed deposit partner.

Type of Fixed deposits you should buy before you retire
Type of Fixed deposits you should buy before you retire