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Best Investment Plans for 1 Year

Last Updated: 3 Jul 2025

Investing in mutual funds for a period of one-year needs a mix of capital safety and liquidity. You basically want to earn stable returns even if it is less than other longer-term investment plans. Obviously, when you talk of 1 year investment horizon, it cannot be an equity fund or even a hybrid fund. Even in debt funds, you cannot go for long term debt holdings since the interest rate risk would be too high in such cases. The options are limited but there still are sufficient choices available.

Here are some solid investment plans for 1 year available to mutual fund investors to invest for a period of 1 year.

Top Investment Options for 1 Year Investment Plans

Here are some of the top annual investment plans you can look for to strengthen your wealth creation process.

1. Liquid funds

These are one of the most popular methods of parking high-return short-term investments up to one year. These liquid funds typically invest in money market instruments maturing within 90 days. Since the holding period is very short, there is no price risk in these funds and are best suited to park short term monies. Here are some top performing liquid funds in the Indian market.

2. Ultra-Short Duration Funds

These funds have also become quite popular as they invest based on duration and not the term to maturity so better suited to maturity matching. The ultra-short duration funds typically invest in debt securities maturing in 3-6 months. Here are some top performing ultra-short Duration Funds.

3. Low Duration Funds

The low duration funds are again funds that invest in securities based on duration. They invest in securities with a duration of 6-12 months. These are also ideally suited to parking of funds of up to 1 year time frame. Here are some top performing low duration funds.

4. Money Market Funds

These money market funds typically invest in money market instruments with maturity up to 1 year. Most money market are very liquid and are low on risk. Hence there is no credit risk unlike duration funds that have some credit risk. Here are some top performers.

5. Floater funds

These floater funds are debt funds that invest at least 65% of their money in floating-rate bonds. The interest these bonds pay change as the interest rates in the economy change. A periodic resetting of rates to keep them in sync with market rates. Such funds are best suited for short term when interest rates are rising. Here are some top performers.

6. Arbitrage funds

Arbitrage fund is a type of mutual fund that leverages the price differential in the cash and derivatives market to generate returns. The returns are dependent on the volatility of the asset. They are classified as hybrid funds but are actually akin to debt funds. They are quite popular for short term parking up to 1 year. Here are top performing arbitrage funds.

7. Fixed Deposits (FDs)

It is one of the most common investment methods that is low-risk and provided by banks and other financial institutions. In this investment, a fixed amount of money is deposited for a specific term at a fixed rate of interest. It tends to be higher than interest on a savings account, and can be paid as interest monthly, quarterly, or at maturity. FDs are one of the best one-year investment plans that ensure fixed returns to conservative investors.

8. Treasury Bills (T-Bills)

These are short-term government securities. These are issued at a discount and redeemed at face value on maturity, usually ranging from 91 to 364 days. T-Bills are considered one of the safest investment instruments due to the government backing. They don’t pay periodic interest. Instead, the investor’s earnings come from the difference between the discounted purchase price and the face value at maturity. They provide good liquidity and are ideal for conservative investors seeking short-term safety.

9. Recurring Deposits (RDs)

Recurring Deposits are facilities where an investor can deposit a given amount at regular intervals, such as on a monthly basis, and at rates that are not so different to those of Fixed Deposits. This is a disciplined saving instrument, which is ideal for individuals who willing to create a huge corpus over time.

The interest is calculated quarterly and the sum is paid at maturity. RDs promote saving behaviour, involve low risk and assist one to plan their financial needs in the future. These expenses can be educational expenditure or holidays.

10. Fixed Maturity Plans

Fixed maturity plans (FMPs) are closed-end debt 1-year mutual fund schemes, whose period can be increased. This investment is mainly focused on stable income securities such as government bonds and corporate debt that mature around the same period as the funds. They also aim to provide predictable returns similar to fixed deposits, along with potential tax benefits. FMPs are suitable for investment since they have a lock-in period. It makes them one of the best investment plans for 1 year.

11. Post Office Term Deposit

Post Office Term Deposits are government-backed savings schemes it is offered at post offices with fixed tenure options. This investment typically ranges between 1 and 5 years. They offer assured returns at competitive interest rates, which are often higher than FDs. These deposits are considered Low-risk investment plans due to government backing. However, income generated by this fund is taxable.

Factors To Consider Before Investing In Funds For 1 Year

You can’t impulsively put your assets in a one year investment plan. Before doing that, you must keep an eye on multiple factors.

Investment Goals and Risk Tolerance

Understanding your investment goals is essential. Are you looking for capital preservation, income generation, fixed return investment options or growth? The details will guide your choice of funds. Additionally, assess your risk tolerance. If you prefer to avoid volatility, you might invest in safer options. These could be fixed deposits or government bonds, which provide more stability compared to equities.

Types of Investment Plans

When choosing an investment scheme, keep in mind the tenure and liquidity of your investment. You may want to look at some of the short-term investment options in India for a period of 1-year maturity which gives a balance between risk and return. Products like money market funds and high-yield savings accounts can provide reasonable returns with very little risk. This makes them nice investments for short term traders.

One-Time Investment Plans

If you just want to keep it simple, this type of plan could be best. It is a one-time investment instead of periodic investment. This approach can be helpful if you have a certain amount of funds available and you would rather not deal with the complexities of managing multiple transactions over time. It’s very important that you select an investment vehicle that matches your risk tolerance and has liquidity when you need the money.

Safe Investment Options

If you are someone who wants to preserve your capital, you need to invest safely. Instruments like fixed deposits and some variety of bonds are low-risk and protect your principal but earn minimal returns. These are very attractive when the markets are uncertain, as they are effective in reducing losses.

Market Conditions and Economic Outlook

Look at the market situation and the long-term economic trends. Due to the recent news of interest rates, inflation, and the general fear in the market, your investments’ performances could be effected. For example, in a rising interest rate environment, fixed income investments may produce lower returns. So stay on top of economic data to have a better sense of the kind of investment decisions you’re making.

Diversification

Risk control is one of the important strategies. Even on an intermediate time-frame, diversifying your funds among different assets can limit potential downside. A well-diversified portfolio can consist of a balance between stocks, fixed income, and cash equivalents that are aligned with your risk tolerance and investment goals.

Conclusion

As an investor, you must focus on capital preservation and liquidity during the investment horizon. Given the lack of availability of longer-term plans, options such as Liquid funds, fixed deposits and Treasury Bills are secure and stand to be a good investment plan for 1 year. You may need to take into account risk tolerance, market conditions and diversification. These are the qualities that make it possible for you to succeed and check off your financial objectives on a short timeframe.

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Frequently Asked Questions

A one-year return on investment can differ between between 5% to 10% as per market situation and selection of investment plan. Short-term investments such as high-yield savings accounts or CDs may offer lower returns but have less volatility than riskier investments.

Safe bets are high-yield savings accounts and money market funds. Investors can use these to both preserve capital, find stability and lower volatility in their investment portfolios.

There are a plethora of safe investment instruments to choose from, such as fixed deposits and government bonds. They are instruments that offer returns that are assured and repay your principal amount, and are suitable for conservative investors who are more interested in preserving their capital than making gains.

When it comes to investing in the future, many people include growth stocks and equity mutual funds among best investments. They have advantages in potential for high returns over time, but with added risk. Potential investors should consider their investment risk tolerance prior to investing in any investments that do not have the preservation of capital as the primary investment objective.

It typically involves a diversified portfolio that includes a mix of asset classes. This approach minimises risk while maximising potential returns. A one-time investment plan in well-researched stocks or index funds can also lead to significant long-term gains if managed wisely.

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