If you are looking for some investment options that can offer you good returns in a short span of one year, then you have to consider the risk-return trade-off. Generally, equity investments are more volatile and risky, but they can also offer higher returns in the long run. On the other hand, debt investments are more stable and secure, but they may not be able to beat inflation or offer high returns.
Depending on your risk appetite, liquidity needs and financial goals, you can choose from various investment options that are suitable for one year. Here are some of the best investment plans for one year that you can consider:
Debt Mutual Funds:

Also Read: Annuity Deposit Scheme: Benefits, Risks and Alternatives
Debt mutual funds are ideal for short-term investment horizons. These funds invest in fixed income securities such as treasury bills, government and corporate bonds, commercial papers, etc. Debt funds offer a high level of security as they invest in high-rated debt instruments. Also, debt funds have the potential to offer much higher returns than a regular savings bank account.
Under debt funds, you can choose to invest in low duration funds or money market funds. Low duration funds invest in securities that mature between six months and one year. Money market funds invest in money market instruments that mature within a year. Both these categories of funds have low interest rate risk and moderate credit risk.
Debt mutual funds also offer tax benefits if you hold them for more than three years. The long-term capital gains are taxed at 20% with indexation benefit, which reduces the tax liability. However, if you sell them within three years, the short-term capital gains are added to your income and taxed as per your slab rate.
Fixed Maturity Plans:
Fixed maturity plans (FMPs) are close-ended mutual funds that invest in fixed income instruments with corresponding maturities. The fund manager will pick instruments such that they mature at almost the same time as the FMP. FMPs come with a maturity period ranging between one month to five years. You can choose an FMP that matches your investment horizon of one year.
As FMPs hold securities until maturity, they are not influenced by the interest rate volatility. The main objective of FMPs is to offer steady returns over a period. FMPs also have a low expense ratio as they do not require active management.
FMPs also enjoy the same tax treatment as debt mutual funds. If you hold them for more than three years, you can avail indexation benefit and pay lower tax on long-term capital gains. However, if you sell them before three years, you have to pay tax on short-term capital gains as per your slab rate.
Arbitrage Mutual Funds:

Arbitrage mutual funds invest in cash and derivative divisions with equities arbitrage possibilities and derivatives arbitrage opportunities. These are open-ended funds, and you can invest in them if you can commit to staying invested for at least a year to take benefit of the tax rules.
Arbitrage funds have a low risk since they exploit the price gap between two markets or segments without making any directional bets. However, the gains are not guaranteed because arbitrage opportunities are not always discovered. As a result, the returns of arbitrage funds are determined by arbitrage possibilities accessible in the futures and spot markets.
For tax purposes, arbitrage mutual funds are considered as equities funds. This means that long-term capital gains up to Rs 1 lakh are tax-free if you retain them for more than a year. Any gains in excess of Rs 1 lakh are taxed at 10%. Short-term capital gains are taxed at 15% if sold within one year.
Liquid Funds:
Liquid funds are a type of debt mutual funds that invest in very short-term securities that mature within 91 days. They invest in money market instruments such as treasury bills, certificates of deposit, commercial papers, etc. These funds are highly liquid and do not have any entry or exit load.
Liquid funds offer higher returns than savings bank accounts and fixed deposits while providing easy access to your money. They also have very low interest rate risk and credit risk as they invest in high-quality instruments with short maturities.
Liquid funds are also taxed like debt mutual funds. If you hold them for more than three years, you can benefit from indexation and pay lower tax on long-term capital gains. If you sell them within three years, you have to pay tax on short-term capital gains as per your slab rate.
Post Office Term Deposit:

Post office term deposit (POTD) is a government-backed fixed income scheme that offers guaranteed returns on your investment. POTDs have terms of one, two, three, or five years. You can select a POTD that corresponds to your one-year investing horizon.
POTD investments are backed by state guarantees and hence pose no default risk. The government sets the interest rate on POTDs every quarter, and it is now 5% per year for one-year deposits.
The interest on POTDs is taxable at your marginal rate. POTDs do not have a tax deduction at source (TDS). However, you can claim a deduction under Section 80C of the Income Tax Act for investments in POTDs with a five-year duration of up to Rs 1.5 lakh.
Fixed Deposit:

Fixed deposit (FD) is a popular and safe investment option that offers assured returns on your deposit for a fixed period. You can open an FD account with any bank or non-banking financial company (NBFC) and choose a tenure that matches your investment horizon of one year.
FDs offer higher interest rates than savings bank accounts and liquid funds while providing capital protection and liquidity. You can also avail loans against your FDs in case of any emergency.
The interest earned on FDs is taxable as per your slab rate. The bank or NBFC will deduct TDS at 10% if the interest income exceeds Rs 40,000 (Rs 50,000 for senior citizens) in a financial year. However, you can submit Form 15G or 15H to avoid TDS if your total income is below the taxable limit.
Recurring Deposit:
Recurring deposit (RD) is another safe and convenient investment option that allows you to save a fixed amount every month for a fixed period and earn interest on it. You can open an RD account with any bank or post office and choose a tenure that suits your investment horizon of one year.
RDs help you build a habit of regular savings while earning decent returns on your deposits. You can also avail loans against your RDs up to 90% of the deposit amount.
The interest earned on RDs is taxable as per your slab rate. The bank or post office will deduct TDS at 10% if the interest income exceeds Rs 40,000 (Rs 50,000 for senior citizens) in a financial year. However, you can submit Form 15G or 15H to avoid TDS if your total income is below the taxable limit.