We often face hassle when it comes to choosing an ideal investment plan for us and our loved ones. Today, there are numerous investment plans available for us to choose from. Therefore, it is essential for us to have a brief and well-structured knowledge about investment plans available to us.
One of the key differences between the investment plans is their holding period, i.e., long-term and short-term investment plans. To help you out, we have prepared a conclusive guide on the differences between long-term and short-term investment plans.
Difference Between Short-Term and Long-Term Investment Plans
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27 June 2025
Short-Term Investment Plans
Definition
Short term investment plans can be defined as investment plans that provide returns to the policyholder in a defined time; it can be a few months or a few years. These plans are perfect for those looking to meet short-term goals and are not interested in waiting for long years to get their returns.
With short-term investment plans, the policyholder can expect a certain amount of money to meet their financial requirements in less time than long-term investment plans.
Some of the Best Short-Term Investment Plans to Invest In
There are various short-term investment plans to invest in. Let us look at a few of them.
- Recurring deposits
- Mutual funds
- Fixed Deposits, etc.
Benefits of Investing in a Short-Term Investment Plan
- Involves Low-Risk
Short-term investment plans involve low risk as compared to long-term investment plans. This is because short-term plans usually do not invest in market-related options and have lower returns than long-term investment plans.
- Helps the Policyholder Meet His Short-Term Goals
We all have different goals, some of them being short-term and within a span of a few years, such as buying a house or car, etc. Investing in a short-term investment plan helps the policyholder achieve his short-term goals without facing any financial restrictions.
- Flexibility
Investing in a short-term investment plan offers higher flexibility than long-term investment plans. Moreover, the policyholder does not have to wait for a longer time to get the lump sum amount at the maturity of the investment policy.
Long-Term Investment Plans
Long term investment plan can be defined as an investment plan that has a tenure of more than one year. These plans are perfect for those looking to meet long-term goals and are willing to wait for long years to get higher returns.
Best Long-Term Investment Plans to Invest In
There are various long-term investment plans to invest in. Let us look at a few of them.
- Unit Linked Insurance Plan (ULIP Plan)
- Public Provident Fund (PPF)
- National Pension Scheme (NPS), etc.
Benefits of Investing in a Short-Term Investment Plan
- High Returns
Compared to short-term investment plans, long-term investment plans offer higher returns to the investor. As a result, the account holder can expect a lump sum amount of corpus at the maturity of the investment plan.
- Helps Meet Long-Term Goals
We have long-term goals, such as retirement plans, child plan for education or marriage, etc. Investing in a long-term investment plan helps the policyholder build a financial corpus that will provide financial security and help the policyholder achieve his or her long-term goals.
- Life Cover to You and Your Family
We never know when we might face an unforeseen event, such as the untimely and unfortunate demise of the policyholder or the family’s breadwinner. In such unprecedented events, a long-term investment plan provides your family with a lump sum corpus that will financially secure your family even if you are not around to provide them financially.
You now know the differences between long-term and short-term investment plans. When choosing which one to invest in, the policyholder should keep in mind his and his family’s goals and financial requirements, how much risk he can take, etc. Going for a leading insurance company is always recommended.
