If you are looking for the best 3 Best Short-Term Investments for Growing Your Money. Then you came to the right place. So read the full article.
Short-term High Yield Investments
Taking a risk with your money is the best into short-term high yield investments can be the perfect compromise between earning 0% interest and taking bigger risks with long-term investments. Don’t worry, I’ll explain exactly where to invest money to get good returns and also give some short-term investment examples along the way.
What Constitutes a Short-Term Investment?
There are so many people who think the investments, they think of things like stocks, bonds, 401(k)s, and IRAs. These types of investments and investment vehicles are the part of a long-term investment game and the portfolio used to fund goals like saving for college funding retirement. They often mature for decades before they’re cashed in for their intended purpose.
A short-term investment in your risk, on the other hand, grows for several months to years. Once it matures, the investment turned to be cashed in for its full value. Therefore, if you know you will need your funds to be in the next 3-5 years or sooner, short-term investments are usually the way to go.
Are Short-Term Investments Risk-Free?
Short-term investments carry all the far less risk than long-term investments, but that does not mean that they are completely risk-free.
If you are relying on your money being there when you want it in a few short terms like months or years, it makes sense that you would want to take on as little risk as possible. However, the best are some of the best short-term investments that come with some degree of risk.
That said you can still take the best risk and can manage your risk by choosing the right options for your situation.
As with most types of investing when you take the less risk then you get the, less reward you will often receive.
1. Online High-Interest Savings Accounts
Time Span: Indefinite
Return: 0-2.50% APY
When it comes to investing young, savings accounts aren’t the most lucrative option.
Whenever you want access to your money at any time and to maximize your returns with the high-yield online savings accounts are a great option.
Every bank offers FDIC coverage up to $250,000. As long as your account told that you are below that amount, you’re guaranteed access to your money even if the bank fails, which is highly unlikely.
It’s not uncommon to see some of the best savings accounts offer interest rates that are more than 5-10 times the national average. Without monthly fees and low (or no) minimum balance requirements in the investment, you can withdraw your money at any time without closing your account.
2. Money Market Accounts
Time Span: Indefinite
Money market accounts are the difference between a checking and savings account. With a money market account, you can write checks and make withdrawals. However, you have to put so much money to be required to keep a higher minimum balance to keep from incurring fees.
Newly opened money market accounts do not typically offer higher interest rates than savings accounts. Restrictions on the number of withdrawals allowed within a given period of time making them less liquid than a checking account but more liquid than a CD, and with comparable interest rates
3. Certificate of Deposit (CD)
Time Span: 3 months to 5 years
CDs are another great and the best option for short-term, high-yield investments.
With the certificates of deposit (CDs) you can give up flexibility in being able to access your funds in exchange for the much higher return. CDs are like you give a loan you give to a bank. They come with a fixed interest rate with which you get the fixed amount and a determined maturity date, at which you’ll receive access to your original investment plus the accumulated interest.
You can still withdraw your money from a CD whenever you want. However, if you do so then you will incur an early withdrawal penalty, the amount of which varies depending on the bank.
The length of the CDs is from 3 months to 5 years. The longer you’re willing to part with your money, the more interest you can earn. Online banks like Discover Bank and CIT Bank offer the best and highest CD interest rates.
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