Investor Question: I am saving up to Rs 45000 every month… Where can I invest this amount for the short term (3 years) as I will need money at that time?

Firstly, let’s see what Rs 45k per month can become in different financial products:

~ Rs 18.5 lakhs in a Recurring  Deposit at a rate of ~ 7% per annum
~ Rs 19.6 lakhs in balanced Mutual funds ( at a rate of return of ~ 10% per annum)
~ Rs 21.5 lakhs in Equity Mutual funds ( at a rate of return of ~ 15% per annum)

If you have been just saving it in a bank account your total savings of  Rs 16.2 lakhs might just grow to Rs 17.5 lakhs

As you can see, the difference is not very much because the investment duration is a short term duration.

If you have a firm goal, like a child’s education or marriage etc, then you should put the money in a Recurring Deposit or Debt / Balanced Funds mix.

If the goal is flexible and you maybe able to leave the money invested for a few more years, then Investing in Equity Mutual Funds maybe a better deal.