Changing The ‘Definition of Short-Term Investment’ According to 21st century

short term investment

According to Investopedia,

A common time frame for cashing out of short-term investments is five years, though one-to-three years or even three-to-12 months is not uncommon for some investors and products.

Is Year The Correct Time-Frame For 21st Century?

India is the fastest growing economy in the world. Hence, it is only natural to believe that things would be hunky dory for its citizens as well.

There are two kinds of earnings and these affect the rate and amount of savings and spending considerably.

The two forms of earning are:

  1. Fixed
  2. Variable

Fixed Income usually includes salary or income from a steady small to medium scale retail business. The manufacturers and Wholesale, however, depend on ‘Variable income’. Hence, they resort to business credits and loans to induce liquidity to run the business.

The average salary of an Indian more often than not fails to meet their requirements in a span of 5 years. Hence, most of the people resort to Personal Loans or Credit Cards. The minimalistic liquidity often deters the individual from investing in anything for more than a year; because they cannot afford blocking the funds.

Hence, the majority of investments are made in savings accounts or fixed deposits.

Inheritance and Real Estate

These are security assets of individuals that are however also linked to the right to freedom and right to Livelihood. The same applies to medical and life insurance policies. Hence, the pursuit to a home should be considered as savings.

Lets Interchange Weeks With Months

The correct time frame for short term investment with even a return of 2% would signify a yearly growth of 8% linearly. The average return from the stock market is also nearly 7%. Hence a growth of 10-15% should be considered as highly profitable.

However, if anyone seeks to double their money they need to invest and re-invest 4 times with a rate of return of 18.92% quarterly. Moreover, the same in a two-year frame would require a rate of return of 9% quarterly.

 

 

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Changing The 'Definition of Short-Term Investment' According to 21st century
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Changing The 'Definition of Short-Term Investment' According to 21st century
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The correct time frame for short term investment with even a return of 2% would signify a yearly growth of 8% linearly. The average return from the stock market is also nearly 7%. Hence a growth of 10-15% should be considered as highly profitable. 
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