Time is worth money, and we are currently looking to make the most of every minute that passes. The same happens in the world of investments, where time is a determining variable in the expected results. Are you thinking of investing but want to receive your money fast? 10 best short-term investments may be the option you need to make your money profitable.
Investments can be classified into short-term investments, lasting up to one year; medium-term investments made between one and five years. The long term is those that exceed five years. When deciding to invest your money, the first thing you have to do is to set an investment goal, through which the time you want to invest money will get established, whether in the short, medium or long term. Each of these types of investment has its characteristics when choosing a short-term investment, priority given to the speed in which the return on investment will receive.
Benefits of short-term investments :
1. The main advantage is the time factor since you can get the capital in a few months.
2. You can quickly receive your earnings and reinvest them.
3. Depending on the asset that is chosen, the level of risk can be low, and thus you will avoid losses.
4. You can invest in small capital.
10 Best Short Term Investments :
1. Certificates of Deposit (CDs)
Certificate of Deposit is one of the best short term investments, offered by banks. Banks pay a high rate of interest because the money gets saved for a long timeline with the banks. The periods of investment are between three and five years, but one can invest even for less than three years. You can receive monthly payment which is the interest given by banks while many investors take interest amounts after the maturity of the investment. The returns range from 0.5% to 3%.
2. Treasury Securities
It is a bond issued by the United States Treasury also backed by the government’s credit. You can get to invest in treasury notes, bills, FRNs (floating-rate notes), and many more. The significant short term investment in treasury securities is TIPs (Treasury inflation-protected securities).
TIPs return ranges between 0.5% and 2.5% which is semi-annually. Your end investment is well worth the amount of both original investment and the interest accrued. If we talk about other treasury securities such as bonds, have no risks involved. Also, the interest rates range between 1.9% and 2.4%.
3. Rewards Checking Accounts
Another best short term investment is Rewards Checking Accounts. You can get full benefits by using a cash-back credit card. If you end up using your debit card 10 to 15 times in a month, then you may miss out on the rewards. Try to use a cash-back credit card instead of a debit card to reap the benefits.
4. Bond Funds
If you want to invest for a short time, then bond funds are the best option to invest. Bond funds, managed by financial advisers, are high-yield investments compared to the money markets. If you are in search of a higher yield investment then bonds are the right fit. The interest ranges over 3% but makes sure to get bond funds with low fees.
5. Municipal Bonds
Another best short term investment is Municipal bonds, but it has a bit more risk compared to TIPs. It is also riskier compared to other types of bond funds. Apart from being riskier, it has high-yield potential, which is the best part. You’ll get these bonds issued by the local or state government agencies. One more benefit that you get is an exemption from interest tax. The return ranges by over 4%.
6. Peer-to-Peer Lending
It is like lending money to someone on credit. But there’s nothing to worry as borrowers get rated based on the creditworthiness. That helps to lower the risk when giving money to the borrowers. The return ranges by over 4%.
7. Money Market Accounts
Money Market Accounts lets the investors invest their money with the opportunity to earn higher interest. The interest rate is higher compared to the savings account. At the same time, the cash gets secured. But using money market accounts needs a minimum deposit.
8. Roth IRA
A Roth IRA is a suitable short-term investment for the people to withdraw money at any time. You don’t even get charged with a penalty after the money gets withdrawn before the timeline. There’s no need to pay taxes as well while withdrawing. You can get higher return options like mutual funds.
9. Paying Off High-Interest Debt
It is another excellent option for short-term investment with high returns. Credit cards through paying off high-interest debt are a smart choice. You can get high returns so you should look for this short term investment.
10. Online Savings Accounts
Compared to many other traditional banks, saving accounts is the best option. Saving accounts offer better return rates. If you go for the high return savings accounts, you’ll get a return between 1% and 2%. Liquidity is higher for online savings accounts, as there are no withdrawal limits.
