Short-term investments are a great way to make money. It can be challenging to know which short-term investments are the best for you, but there is no need to worry because we will break down the differences between short-term investments and help you decide what’s best for your needs.
1. Online Savings Account
An online savings account can be a good option, especially under the year mark. They are low-risk and low reward options. But it delivers what it promises when you sign up to a guaranteed interest returns rate and can withdraw easily.
2. High Yield Savings Account
We have discussed savings accounts but make sure you compare all different options before deciding on a savings account. There are many choices, and online-only companies like Chip have been beating some of the traditional banks, so make sure you do your research and compare all options. If you decide to lock money away in a savings account, make sure you get as much interest as possible!
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3. Money Market Accounts
Money market accounts are a short-term investment with the same risk as an online savings account but usually has higher interest rates. With money market accounts, you can withdraw your money at any time without penalty and have access to it through checks or debit cards. The major downside of money market accounts is that it is a short-term investment is that you are limited to six transactions per month.
4. Cash Management Account
A cash management account is a short-term investment with low risk. This short-term investment can be a great option depending on the amount of money you have for short-term investments. The downside is that you need a high balance to enter into this type of short-term investment.
5. Short-Term Bond Funds
A short-term bond fund is a short-term investment assuming that you want to invest in the short term until you need it. This short-term investment is not as volatile as short-term stocks and has less risk of short-term bonds (depending on the company). The downside of this type of short-term investment is low returns.
6. Government Bonds
Government bonds can allow governments and taxpayers to trade debt for other forms of monetary policy, such as quantitative easing or tax cuts. The idea is that providing investors with other forms of fiscal measures eliminates the risk and complications resulting from significant amounts of government debt (lowering unsustainable levels).
7. Money Market Mutual Funds
Money market mutual funds are considered to be low-risk, short-term investments. The risk associated with money market mutual funds is typically lower than with other short-term investment options, such as short-term bond funds and short-term stock funds.
One of the benefits of investing in money market mutual funds is that you can purchase them through a brokerage account. That means that you have access to various types of Money market mutual funds, which gives you more options when choosing the suitable short-term investment for your needs.
8. Certificates of Deposit (CDs)
A certificate of deposit, or CD, is a short-term investment offered by a financial institution, such as a bank or credit union. A CD typically has a maturity of one year, but some CDs have maturities of two years or more.
When you purchase a CD, you agree to leave your money invested in the CD for the entire term. That means that you cannot withdraw your
9. Peer-to-Peer Loans
Peer-to-peer loans, also known as P-to-P loans, are short-term investments that allow you to invest in consumer and small business loans. When you invest in a peer-to-peer loan, you invest in the loan itself rather than the borrower.
One of the benefits of investing in peer-to-peer loans is that these short-term investments allow you to choose the highest risk and return, depending on your short-term investment goals. This short-term investment option has a high risk because it isn’t tied to the collateral like traditional loans; however, it can be very profitable.
10. Stock Market
The stock market becomes a viable option if you can stretch over the five-year mark. Investing over five years in the stock market means you are much more likely to succeed as you have ridden the short-term ups and downs.
If you are interested in investing in the stock market which gives you recommended stock picks by professionals. They are also handy guides to help you avoid investing mistakes. They will also tell you when the right time to sell is.
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