Short Term Investments

That’s when many turn to short term investments. These investments are important to both the consumer and the financial industry, giving both of them the option of using the money and seeing a nice return quickly. Without some of the investments made for the shorter terms, many wouldn’t even consider investing their money in the first place.

Many times, investments made for the shorter terms can help with day to day issues that most people are faced with. With these types of monetary investments, returns can be seen within a year or two, allowing families and individuals prepare for a foreseen future event, such as vacation, retirement or graduation. Many smart investors use short term investments in order to get more money to invest in a larger, more predominate investment. 

A lot of investors use the short term investments option not just to make a little money in the end, but to store money that is not being used at that time. It is a smart idea to invest the money instead of letting it sit around not collecting interest. Although many use some type of investment for storing their money, each investment comes with its own risks, rates and length of time that the money can be stored.

One of the most popular short term investments that people use is putting their money in a checking or savings account. Although most of these investments don’t have a huge pay off rate, they are used by just about anyone that has a steady income or money at hand. These investment strategies don’t require much money to start and can be withdrawn without any penalties. 

Depositing money in a bank is easy but it does require some caution.  Make sure the banking institution is insured by the federal government or FDIC. This will protect your deposit, usually up to $200,000, and it insures that if the bank itself has financial trouble, your money is safe. As a rule, if you deposit your money into a savings account, you will accrue more interest than if you deposit your money into a checking account.

There are a few other investments that can be made to store, and hopefully increase, your money. Some of the most popular are CDs, money market funds and treasury securities. These types of investments are great for those that want to store their money for up to 10 years. Although investing in the money market has risks all its own, many investors find that they will have a bigger return. Certificates of Deposit is a very smart way to get a return without taking unnecessary risks that are often involved in investing money. When investors are looking for short term investments, many turn to CD’s for these very reasons.

Types of Investments - Based on the duration of commitment of money, there are two kinds of investment: long term and short term. The phrases “long term” and “short term” have been borrowed from the practice of Accounting, wherein “long term” means a time period that is generally in excess of one year, while “short term” is understood as one year or less. Click here to learn more about the different types of investments.

Money Market Investing - Many people today are choosing to invest in the money market due to the lack of risk that is involved. However, before you invest any money, you should know how the money market works. In the money market, the assets that are traded are papers that evidence indebtedness of large corporations. Click here to learn more about money market investing.

High Yield Money Market Accounts - High yield money market accounts are investment vehicles that many people use to grow their money in a safe manner. They are much like any other deposit type account that is offered, except unlike traditional savings accounts, money market accounts (MMA) offer the ability to write checks from the account. Click here to learn more about high yield money market accounts.

Short Term Investment Strategies-Some formulas are lower risk than others. Largely, the goal with any type of investment whether it is the long or short term is to protect the capital and receive the largest gains with the least amount of risks. There are some investment vehicles that are much safer than others when it comes to the short term. Click here to learn more about short term investment strategies.