It is a general rule that the longer you invest your money, the greater the returns. There are several options for the same; these are available, only if you can invest for at least 10 years and more. But, what if you want money after, say 5 years? This is where short-term investments come to play.
Investing in stocks and bonds is one of the best options for the same, but it comes with associated risks. However, if you are one of those who does not want to take such high risks, then there are other options like high-yield bank accounts, which can give you excellent returns on investments (ROI).
High-yield Bank Account
There are several banks and financial institutions, which provide checking and savings accounts that give a high interest. Today, they have become one of the most popular short-term investment options used by people. The best part of going for this alternative is that you have the flexibility to deposit additional money or withdraw some from your account.
You don't necessarily need to keep all your money for a specified period of time. The interest rates that you can earn is relatively higher compared to standard bank accounts.
Money Market Funds
These funds are offered by corporates, where your money is invested in safe securities like commercial papers, government securities, certificates of deposit, etc. The best part of these funds is that whenever you want the money, you can withdraw it or can even write a check. Also, the return you can get is relatively higher than money market accounts.
Certificates of Deposit
These are one of the best short-term investments, giving a good return. If you go for this option, you will need to keep the money for a specified period of time, usually between 3 to 60 months. You can go to any bank and get more information on certificates of deposit and the minimum amount you need to have.
The best part is that they are a safe option, and depending on how long you keep the money, they can give higher ROI than money markets.
Government Bills and Notes
This is another good option if you want quick returns, besides being a low-risk investment option. Government bills and options are guaranteed by the government, and the best part is that they mature very soon, usually between 1 to 10 years.
If you go for treasury bills, the maturity period is one year, while treasury notes have a maturity period between 2 to 10 years. Moreover, you can buy them directly, without paying a commission; besides, they are exempt from taxes.
These bonds are issued by the state or local government, and they are released so as to build projects like highways, schools, etc., for the betterment of the public. Municipal bonds are an excellent option if you are looking for an income, wherein you have to pay a lower amount of taxes.
Such bonds are issued by various corporations, ranging from blue chip to manufacturing companies. Usually, these bonds pay more than government bonds, and can be a good option if you want to invest for a short period. However, you need to remember here that more credit worthy the company is, the lesser rate of interest it would pay.
Thus, these are some of the options for short-term investments, which you may consider. While choosing any of these options, make sure that you go through the terms and conditions, so that you know the rules that you would need to follow.