Though risky as it may seem, some people opt for short-term investments because of their desire to see their profits at once. It can sometimes be discouraging for them to wait for many years before they could see their return-of-investment (ROI). Besides, in times of emergency, they will not be able to withdraw their investment before the maturity date. To reduce the possible risks, they should learn more about the different short-term investments and ways to properly accomplish them.
• Municipal bonds
People can earn income from municipal bonds, which are issued by local government agencies. Moreover, this is tax-free.
• Money market account
This is a savings account that gives a high interest rate but requires a high minimum deposit and a minimum balance. Money market account holders are limited to a certain number of withdrawals per month.
• Lending to peers
People can earn a lot from lending to peers. In fact, most of them earn 100% interest. However, this can be a risky investment. So, it is important to lend to individuals who can be trusted to pay their loan and interest.
• Treasury bonds
Those who feel apprehensive about investing their money can feel more secure with treasury bonds. Since these bonds are issued by the US government and the invested money is loaned to them, they can be sure of the repayment of the principal plus the fixed interest.
• Certificate of deposit
A certificate of deposit is another safe investment. This is a savings account that has a specified maturity date. This earns a set interest rate and is 100% insured with FDIC. Account holders can only withdraw their money plus the interest upon the maturity date.
• Regular savings account
Though the interest earned by a regular savings account is rather low compared to other investments, it is one of the safest ways to earn interest. It is, also, insured with the FDIC. Moreover, people can withdraw from their account anytime they need funds.
• Stock dividends
Another way for people to earn is through stock dividends. Their income is earned from the number of stocks they have in a company. They have a higher potential for earnings when they have a considerable quantity of stocks and a VIP status.
• Fixed savings deposit
This kind of investment is safe because it is 100% insured. This means that no matter what happens, depositors can back the money that they invested.
• Short-range investment funds
Investors can earn interest by placing their funds temporarily on any of the investment avenues such as t-bills, government bills, bank notes and corporate notes, among others.
• Foreign currency deposits
Investors can earn if they have deposits of foreign currencies that have a high market. Also, these deposits come with a complete confidentiality clause.
Short-term investments can allow people to earn profit to achieve their present needs. However, to minimize the possible risks involved, they should carefully weigh their options and see what suits them best.