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If you are looking for a short-term investment plan that can give you good returns in three years, you have several options to choose from. Depending on your risk appetite, liquidity needs and tax implications, you can select the best investment plan for your financial goals.

Best Investment Plan for 3 Years in India 2024

Scheme NameReturns RateMinimum Investment AmountMaximum Investment AmountLock-in Period
Fixed Deposit5.5% to 8%INR 1,000No limit3 years
Recurring Deposit5% to 7.50%INR 100 p.mNo limit3 years
Post Office Time Deposit Account7.50%INR 1,000No limit3 years
Liquid Funds5% to 6%INR 1,000No limitNo lock-in
Short-Term Funds4% to 6%INR 1,000No limitNo lock-in
Low Duration Funds4% to 6%INR 1,000No limitNo lock-in
Arbitrage Funds4% to 6%INR 1,000No limitNo lock-in

1. Fixed Deposit (FD)

Fixed deposits (FDs) are a popular investment choice due to their stability and guaranteed returns. They are offered by banks and non-banking financial companies (NBFCs) for a fixed tenure. The interest rate for FDs is predetermined at the time of investment. Generally, the longer the tenure, the higher the interest rate. FDs provide a secure investment option, making them suitable for conservative investors.

2. Recurring Deposit (RD)

Recurring deposits (RDs) are suitable for individuals looking to invest a fixed amount regularly over a specific period. RDs allow investors to deposit a fixed sum each month, which accumulates interest over time. This investment option is ideal for individuals with a regular income and a disciplined savings habit.

3. Post Office Time Deposit Account

Post Office Time Deposit Account is a government-backed investment scheme that offers fixed interest rates. It is a safe and reliable option for investors seeking risk-free returns. The interest rates for these accounts are revised by the government on a quarterly basis.

4. Liquid Funds

Liquid funds are mutual funds that invest in short-term money market instruments, such as treasury bills, government securities, and certificates of deposit. They provide high liquidity and are relatively low risk compared to other mutual funds. Liquid funds offer a higher return than traditional savings accounts and can be an excellent option for investors seeking stability and moderate returns.

5. Short-Term and Ultra Short-Term Funds

Short-term and ultra-short-term funds are debt mutual funds that invest in fixed-income instruments with short maturities. They aim to provide stable returns over a short investment horizon while maintaining low volatility. These funds are suitable for investors who want to balance risk and return.

6. Low Duration Funds

Low duration funds are debt mutual funds that invest in fixed-income securities with a maturity period of 6 to 12 months. These funds offer a relatively higher return compared to liquid funds, with moderate risk. Low duration funds can be a suitable choice for investors seeking higher returns than traditional fixed deposits without compromising on liquidity.

7. Arbitrage Funds

Arbitrage funds take advantage of price differentials in the cash and derivatives markets. These funds invest in a mix of equity and debt securities and aim to generate returns by exploiting short-term price discrepancies. 

Arbitrage funds are considered low-risk investments as they are designed to provide stable returns with minimal volatility. Arbitrage funds best suit investors looking for equity exposure but are not high-risk takers. For short to medium financial goals, arbitrage funds are a suitable option. 


Investing for a short-term period of three years can be challenging as you have to balance the risk, return and liquidity factors. Depending on your financial goals and risk appetite, you can choose from various schemes such as fixed deposits, recurring deposits, post office time deposit accounts, liquid funds, short-term and ultra short-term funds, low duration funds and arbitrage funds. 

You should also compare the interest rates, tax implications and other parameters of different schemes to maximise your returns. Remember to diversify your portfolio and review your investments periodically to achieve your financial objectives.