It can be challenging to know which short-term investments are the best for you, but there is no need to worry because this article will break down the differences between short-term investments and help you decide what's best for your needs.
A short-term investment is an investment that you can easily change back into cash – such as a high-interest savings account or a money market account.
Are Short-Term Investments Profitable?
Short-term investments are profitable, especially if you consider the alternative of not doing anything with your money short term even if you decide to put your money in a savings account with a low-interest rate that is still better than earning no interest.
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.
High Yield 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!
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.
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.
Short-Term Bond Funds
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.
Government bonds can allow governments and taxpayers to trade debt for other forms of monetary policy, such as quantitative easing or tax cuts.
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