8 Best Short-Term Investments with High Returns is an interesting topic you will love to read about. If you want to invest your money in the short term, then it’s best that consider short-term investments.
Short-term investments are easily liquified. They allow you to grow your money and within less than five years, you can get access to your cash.
8 Best Short-Term Investments with High Returns
There are so many investments that make money nowadays. However, if you are looking for an investment where you can keep your money and access it in the not-so-distant future, then this post is for you. Check out the list of some of the best short-term investments that could make lots of money for you
High-yield Savings Accounts
If you are risk averse investor, then this account could be the best option to hold your money in the short term. This account allows you to grow your money daily as an interest rate will be paid by the bank on the money you deposit. High-yield savings accounts allow you to withdraw or transfer your cash out of your account up to six times per month.
Cash Management Accounts
Another alternative for short-term savings is cash management accounts. Cash management accounts allow you to invest in a variety of short-term investments. In addition to the fact, that this account is a good way to grow your money, they also offer you liquidity. This means that you can access your money quickly and it may also pay interest on your holdings.
Cash management accounts are offered by Robo advisors and discount brokers. Some cash management accounts provide check writing, mobile check deposit, goal setting, overdraft programs, bill pay, and more.
Money Market Mutual Funds
Are you looking for a short-term investment because you’re scared of the risk of not getting your back? Money market mutual funds could be the best for you. It invests in short-term securities like Treasurys, municipal, corporate debt, and bank debt securities. This investment is easily liquid, so you can access your cash readily.
Money Market Accounts
Money market accounts are another good choice for short-term investments. Unlike regular savings accounts, money market accounts allow you to write checks and use debit cards. They also offer a higher interest rate than regular savings accounts.
Short-Term Certificates of Deposit
Usually, when you invest your money into a certificate of deposit (CD), you’ll be charged a fee by the bank if you withdraw the funds before they mature. However, short-term CDs such as no-penalty CD lets you dodge the penalty fee for early withdrawals.
Certificates of deposits are time-defined investments. This means that when you open one, you’re agreeing to hold your money in the account for a specific time depending on the maturity you want. Furthermore, in exchange for the security of keeping this money in its vault, the bank will pay you an interest rate.
This investment could be an excellent one for you if you are looking to easily access your cash while you earn some interest.
Short-Term Government Bond Funds
Government bonds work similarly to corporate bonds. However, the difference is that they are issued by the US federal government. It is like giving a loan to the government, while you’ll get your money back with a fixed rate of return. Government bond funds purchase investments like treasury bonds, notes, and bills, as well as mortgage-backed securities.
Government bond funds are backed by the full faith and credit of the US government. Hence, they are also considered a safe investment. Additionally, government bonds pay a reliable interest rate. However, it does not yield high returns as corporate funds.
Short-Term Corporate Bonds Funds
This security is in form of a loan. It is offered by companies to investors. The company will pay back the investor the principal amount with an interest rate. Furthermore, the maturity date of corporate bonds and interest rate is preestablished by the corporation.
Corporate bonds pay an interest rate regularly and are considered safe to an extent. As far as short-term investing goes, you can find corporate bonds that mature within three years or less.
Treasurys
There are three varieties of treasuries T-bills, T-bonds, and T-notes. They all have different maturity dates but you can access your money within the short term when you invest in treasuries. Also, they all offer safe yields because they are backed by the AAA credit rating of the US government.
Treasurys are among the most liquid bonds on the exchanges. They can be bought and sold as long as the market is open. This investment is best for investors who know the exact bond that they want to invest in because of the risks and rewards different bonds offer.
FAQs
What is a Short-Term Investment?
An investment is considered short-term when it has a time frame of about five years or less. This means that they can easily be converted to cash, typically within five years.
What Makes a Good Short-Term Investment?
A good short-term investment doesn’t fluctuate too much in value as many stocks and bonds do. In addition to this, a good short-term investment is highly liquid. Hence, you can quickly access the cash you invested in it. Also, a good short-term investment has low transaction fees.
Are Short-Term Investments Risky?
Short-term investments have a shorter time frame than long-term investments. Because of this duration, they are considered less risky. This is because they offer the opportunity to take advantage of market conditions. However, some short-term investments like peer-to-peer lending can still be risky.
What Should I Invest in With Little Money?
If you want to invest with small money, below are some low-risk investments that you could consider
- High-yield savings accounts.
- Savings bonds.
- Dividend-paying stocks.
- Money market mutual funds.
- Preferred stocks.
- Treasury notes, bills, and bonds.
- Short-term certificate of deposits.
How Do You Turn Little Money into a Lot?
To turn little money into lots of money, you have to
- First, start by investing in yourself.
- Pay off debt.
- Invest in real estate.
- Also, invest in the stock market.
- Build your company.
What Investment Pays Highest Returns?
Below are some safe investments that yield high returns
- Certificates of deposits.
- Municipal bonds.
- Corporate bonds.
- Treasury bonds.
- Treasury inflation-protected securities.
- Money market accounts.
- High-yield savings accounts.
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