When it comes to having your money earn you even more money, long-term investments will usually allow you to earn the most money. However, not everyone has the time or patience to put their money in long-term investments. For situations like this, there are shorter-term investment options that could make a lot of sense for you financially.
To help you know what your options are and give you the best chance of making a decent amount of money in this area, here are three tips for making short-term financial investments.
Know How Long You Have To Invest
The first thing you need to know when you’re wanting to invest in a short-term manner is how much time you actually have to let your money rest in an investment vehicle.
According to Arielle O’Shea and Dayana Yochim, contributors to NerdWallet.com, short-term investment vehicles can be broken down into something that requires less than two years, between two and three years, and between three and fives years. For the shortest time frame, you should look to use an online savings account or money market account. If you have between two and three years to invest, a bond or mutual fund could be a good option for you. And for those with three to five years available, a certificate or deposit or peer-to-peer loan may work.
Whatever option you choose, try to make sure that you get the highest possible interest rate that you can find so that you’ll be making the maximum amount of money off of your investment.
Pick The Right CD
A certificate of deposit can be a great choice for a short-term investment. However, you want to be sure that you’re picking the right CD for your short-term investment so you don’t end up with your money being stuck in your investment if the time comes that you need it.
To guard against this, Jeff Rose, a contributor to GoodFinancialCents.com, recommends that you try to invest in a CD that has no penalty for withdrawing your money early. This will ensure that you’re able to invest your money for as long as you possibly can while still being able to access it if necessary without having to worry about being setback financially because of it.
Comparison Shop For The Best Savings Account Rates
For many people, a savings account might be the best option for a short-term investment when they still want to have full access to their money. In a situation like this, James Royal, a contributor to Bankrate.com, shares that you’ll then want to comparison shop so you can find the best interest rate on any available savings accounts. This research is relatively easy to do, so there’s no reason why you should settle for a savings account that doesn’t give you a decent interest rate on your money.
If you’re wanting to use some of your money to make a short-term investment, consider using the tips mentioned to help you make the best decision in this area.