Short-Term Investments Options
When thinking about investments, long-term often comes to mind. This is because most people invest for future goals, such as retirement and real estate purchase and the like. However, there are also those whose reasons why they want to invest their money are more within the foreseeable future. It could be for a vacation that’s happening soon, or the purchase of a car, or the even the payment of debt. This is when short-term investment comes in. And yes, there are plenty of options available to meet that end.
Simply put, short-term investing allows you, the investor, to invest your money without tying it up for a long period of time. Typically, money grows in a few short months to just a few years with a short-term investment. The best part is this requires little to no risk; and once it is mature, you can then turn your yields into cash or invest it anew. Here are your options.
Online high-yield savings accounts
These days, most household names in banks offer a diversified portfolio of service offerings for online customers. One of these is high-yield savings accounts. As the name suggests, these savings accounts have higher yields as opposed to regular savings accounts, so you get more bang for your buck.
The best part about these sort of accounts is they are still protected by the same safety nets that bank use. For one thing, it is under FDIC coverage, as long as it doesn’t exceed $250,000. For another, they are highly liquid, so you have quick access to your money without any additional expense or hassle involved.
Money Market accounts
Known as “savings accounts on steroids,” Money Market accounts are very similar in such that they have higher yields, as well as provide you with ATM cards and checks. However, its average per year yield is very close to that Certificates of Deposit. Moreover, yields are based on the account balance and not on how long the money has been in the account, so you can add to it as you see fit and still enjoy the yield.
Certificates of Deposit
Speaking of Certificates of Deposit, this is a very great way to invest your money for the short term. Banks offer various terms for Certificates of Deposit, ranging from three months to as much as five years. With Certificates of Deposit, you can invest your money in the amount of time that you desire. The longer the investment term, the higher yield you will enjoy. You can even elect to receive monthly payments derived from the interest your investment earned.
A small downside of the Certificates of Deposit is that you will have to wait until the maturity date to access your money. Otherwise, you will be charged a fee. This could actually work to your advantage, however, if you really want your investment to maximize the full breadth of its earning potential.
Short-term bonds and ETFs
Short-term bonds and exchange-traded funds often need to be handled by a professional financial advisor. However, they generally do earn higher yields. This option is largely market-based, so what you earn depends on the current market fluctuations. The great thing about this is these bonds and funds mature within a maximum of two years, so you have access to your investment when you do need it.
Treasury Inflation Protected Securities
Also known as TIPS, these are government bonds that rise with inflation based on the Consumer Price Index. In a nutshell, your TIPS investment starts out with a minimal interest, but after investing it for five years, it can potentially double the initial investment that you put in. Also, this can easily be acquired through the government Treasury website.
Peer-to-peer lending websites are currently gaining traction in the short-term investment space, and for a good reason. Basically, these sites work by allowing investors to purchase notes as their investment. These are then spread out and invested in various other means by the site, which reduces the investors’ risk. Investors then receive a monthly repayment of the loan with interest.
Most of these peer-to-peer lending websites have rather high criteria when it comes to the investors they take on, so one needs to have a good credit history to be accepted. This not only decreases the potential losses that the sites take on as lenders but also reduces the risk of investments being defaulted.
So you see, short-term investment options are plentiful and accessible. Growing your money quickly and easily have never been so fun!
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