Short Term Investments

With the economy constantly changing, many people are looking for a stable way to invest their hard earned money with the use of short term investments. Although there are many different ways of investing money, few of them will turn profits in a short period of time. To some investors, having their money return benefits in ten or twenty years is just not a feasible option. They may need the money in the very near future and they don’t have the time to wait for many years to see some kind of profit.

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 These investment strategies don’t require much money to start and can be withdrawn without any penalties.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.

Best Short Term Investments for 2011-2012  

The best short term investments for 2011-2012 are the same short term investments that financial advisors always push as best. Some of the investments for 2011-2012 will be a bit surprising and a bit of a throw back to the past.  

Of course the tried and true short term investments will make the best short term investments for 2011-2012. Things like short term debt bonds. Certificates of Deposits are also considered a best short term investment for 2011-2012 for the faint of heart that like to invest in something that is really low risk. 

There are a few surprises though that the pros are recommending given the state of the economy and the need to still make some money off your investment.  

Gold 

One of the best short term investments for 2011-2012 is Gold. Here is why when you buy gold at a low it is always almost guaranteed to go back up. Gold is one of those things that fluctuates with the seasons. So if you buy up some  gold in the summer when there is not much happening in way of special occasions and you can hang onto it until  the holiday season you are bound to make some quick cash.  

Most folks have stopped trading in gold in the last twenty years or so but that trend is changing because people have adopted the attitude that they want to see what they are getting for their money. They want to be able to have something tangible they are investing in.  

Mutual Funds  

Mutual funds are a pretty safe place to park some money. They are considered one of the best short term investments for 2011-2012. These are pretty low risk vehicles that can be structured in a host of ways to your advantage.  

Bonds 

Bonds can be a best short term investment for 2011-2012. Of course it is far better to purchase government debt bonds than it is to purchase corporate debt bonds if you are concerned with low risk but if you are a bit more daring and would like a higher return than corporate debt bonds may be the answer.  

In either case bonds are a great short term investment. Typically you can expect an agreed upon rate of return.  

Low,Low Risk  

If you are after a really low risk short term investment than parking your cash in a certificate of deposit at your local bank will do it. Of course you are not going to get a return that you will get from the other best short term investments of 2011-2012 but your money will be safe.  

Short Term Investment Options  

Short term investment options are a great place to park your money for a little while.  They are several different types of short tem investment options that are relatively safe places to park your cash, where you can earn some interest. 

Goal 

When you have some money and you are considering some short term investment options you need to consider your goals for the money. Do you want the money locked down?  Do you want it available to you? How long are you planning on leaving it in a short term investment vehicle?  Based on your answers to these questions there are a quite a few good options available.  Once you have your goals established and know how long you want to keep your money parked than you can evaluate some of the options.  

Money Market Funds  

Money market funds (MMF’s) are usually offered by brokerage houses. They are a great place to park your cash for the short haul. They usually offer higher interest than traditional savings accounts, are usually very low risk and you can still have access to your money should you need it.  

MMF’s usually allow a withdrawal or two each month; you can opt for an interest check quarterly or choose to roll the interest in to the MMF. 

Certificate of Deposits  

Certificate of deposit account s are short term investment options that are offered by banks. They pay higher interest than traditional savings accounts but have different rules and restrictions. CD’s are not as liberal as MMF’s. Usually the agreement is for at least 6 months and they are definitely not transaction friendly accounts. Typically you deposit the money and agree to leave it alone for the term that has been agreed upon, of course no one wants to keep your money, if you really need to get it out you can, but expect to pay penalties.  If you remove the money before the end of the term you may wind up with less money than you put in. 

Money Market Accounts  

Money market accounts are also short term investment options that are offered by banks. They are more liberal than CD’s and are similar to Money Market Funds. They are transaction friendly accounts, which mean that you can withdraw money without penalties. 

Regular Savings Accounts 

Regular or passbook savings accounts are a really safe place to park your money; they are virtually without risk, transaction friendly, but offer a much lower interest rate than most other short term investments.  If you are more cautious than most this may be a nice safe option for you.  

If you have some extra cash that you need to stash for a short period of time, why not look at short term investment options?  You can earn money on your money while you are waiting to make a larger investment or purchase.  There are many different options that are sure to fit most any situation.   

Decide on your financial goals and than choose from one of the many short term investment options that are available.  

Best Short Term Investments 

Folks always ask “what are the best short term investments?” and the answer is really quite simple. It is an individual preference. The best short term investments are obviously ones that you will make money from that is after all the goal in any investment vehicle.  

There are some that are better than others, because they are lower risk with a decent return.  Keep in mind though that every investment has a certain amount of risk, there is no such thing as a risk free investment.  

Points To Ponder  

Short term investments come in all shapes and sizes, there are bonds for municipal debt, savings, Money Market Accounts, Money Market Funds, Certificate of Deposits, T Notes and a slew of other places that you can park your money for the short term.  

There are several points that you need to consider before making any investment decisions.  

How long can you keep the money parked? Is this money, money that you are not going to  miss or wont need to tap into for a year or so? If it is than you are in a much better position to find the best short term investments. Many short term investments that return the highest yields are investments that are going tie up your money for a certain term. Debt investments typically will tie up your money for at least 6 months, this means that if you want it back you are going to have to pay in the form of penalties.  If you need to be able to move your money around more freely than you may want to consider a limited transaction account in the form of a Money Market Fund or a Money Market Account.  

How much money can you invest? Some bonds, T Notes, MMF and MMA and Certificate of Deposits require a certain amount to purchase or open. This may affect your options. You may be limited in your investment vehicle options by the amount of money you can afford to invest.  

Best Qualities  

To determine the best short term investments there are certain qualities that need to be considered.  Flexibility is a great component of any investment. Of course return is also a huge concern.  Low risk is another quality that is super important. 

One of the best short term investment options that is flexible has a decent return and is very low risk.  Money market funds are usually managed by brokerage houses. They are very safe vehicles and offer a much higher return than traditional savings accounts.  A MMF offers flexibility , a decent return and low risk meeting all the qualities of one of the best short term investments.  

Another one of the best short term investments is the I Bonds, this is a treasury bond that only lacks flexibility but meets all the other qualities of the best short term investments.  

There are plenty of short term investments to choose from and many of them can easily fit into the best short term investments category. Finding one that fits your goals and situation is relatively easy.