Short-Term Investments returns often look penny, yes but not all, some best short term investments reward you more than others.
If you don’t huge money but have some little cash to invest for a purpose, the best investment option to choose would be a is a short-term investment.
Then what are the best short-term investments to maximize your returns, here are some that can help you make the most money before needing the cash?
Most people who go for short-term investments do normally save for a short-term goal, often time it may be for a house down payment, buying a new car, or paid for not too expensive personal or family bills.
Short-term investments as we all expect should give fewer returns because the higher risk you take investment, the higher the returns, and the lower risk you take, the lower your returns.
We know you don’t want to leave your money in the bank sitting and earn you low interest on your savings account because that is going to bring you a penny on a monthly basis. Also, you are looking to run away from investments that will take the money you plan to use.
Don’t worry let me walk you through some of the short-term high yielding investments you should try.
In case you don’t know, a short-term investment grows for several months to years and once it matures, the investment can be cashed in for its full value.
This investment is good for individual who may need her funds in the next 3-5 years or sooner, if you are such investor short-term investments is usually what worth considering.
Are Short-Term Investments Risk-Free?
No one will tell you those short-term investments don’t carry any risk, it is just that it far less risky when compared to long-term investments. It is not completely risk-free.
If your money is dear to you and you consider using it within few months to years, then it is better when you take the lesser risk. Even some best short-term investments come with some degree of risk but you can still manage your risk by choosing the right options that align with you and your goal.
The Best Short Term Investments Options With High Returns
Now that you much about what short-term investments entails, we about explaining the best options that will give you high returns are and the risks involved see how best you can start investing your money for the best returns.
1. Money market accounts
Money market accounts give returns of 1-2%, and it is a hybrid between a checking and savings account.
Money market account allows users to write checks and make withdrawals but often time keeping a higher minimum balance may be required to stop incurring fees.
A money market account that is opened newly normally gives higher interest rates than savings accounts. The restrictions placed on number of withdrawals make it less liquid than a checking account. It is more liquid than a CD and with comparable interest rates.
2. Online high-interest savings accounts
Saving account may not be lucrative for the young folks, when it comes to investing because it may only return is 0-2.50% upon your investment.
If you want to go for it, online high-yielding savings accounts will be the best option for you, it give you the chance to withdrawal your money anytime you feel like.
It’s rare to see some of the best savings accounts offer interest rates that are more than 5-10 times the national average, this is why high yield saving accounts is better than the low interest saving accounts.
3. Municipal bonds
A municipal bond is offered by the government agency, state and local, these funds are normally used to complete public projects like creating more infrastructure for the people.
There are two types of municipal bonds, which are the revenue and the general obligation municipal bonds.
The revenue bonds are meant for a specific revenue sources, such as toll road fees while the general obligation bonds are not backed by any specific project.
This high-yielding investment is good as your money is secured and the earnings will keep increasing until you want your money withdrawal.
4. Certificate of deposit (CD)
Certificates of deposit (CDs) are great for short term and it comes with 0.5-3% returns, it is a high yield investment which is good for the short time investor.
You exchange your funds to the bank for higher, it is a loan provided to the financial institutions like the bank by individual investors like you.
Certificates of deposit (CDs) come with a fixed interest rate, and a date of maturity will be set, once it reaches the date, you will have access to your original investment and the accumulated interest.
It often comes with 3 months to 5 years life span but you can withdraw your money from a CD at any time you like, when you withdrawal before the set date you will be penalize for the withdrawal made.
As your money stay invested, the longer interest you earn, you can check for online banks that offer the highest CD interest rates.
5. Peer-to-peer lending
Peer-to-peer lending allows the lender to lend money to the borrowers either for personal use or for business purposes.
Several online platforms connect both the lenders with the borrowers and make the transaction steamily easy.
The average return is 3-8% and with a life span of 3-5 years, this is a short term investment that gives high returns.