Short-term investments may be a safer alternative for investors when the markets are unstable. Short-term investment allows investors to invest their money with little or no risk.
Here are some short-term investment accounts that you can consider investing in. Which one is right for you depends on your particular situation and preferences.
• Cashback rewards offers
Pursuing rewards may not automatically come in mind when thinking of short-term investments. The sign-up bonuses that credit card offers can actually appear lucrative. The catch here is that the more you spend, the more points you earn. You can use these points to book your travel tickets and redeem them at retail stores.
• Lending club
The main aim of peer-to-peer lending websites is to allow investors to broaden their investment options by spreading them out, thus reducing the risk. These websites help investors connect with qualified customers in need to small amount of loan. The investors receive monthly income in turn.
• Roth IRA
Roth IRA is usually is treated as after-tax income. You are free to withdraw any contributions (but not earnings on those contributions) at any given time. Although not recommended, it does give you the option to withdraw amount from it, if times get tough.
• Online saving accounts
Online savings accounts makes sure that your investment will not lose any money. They help in generating a little bit of return. You might never lose principal on your investment as long as you keep your total deposit under FDIC coverage of $250,000.
• Certificate of deposits (CD)
Various banks offer various terms for their deposit accounts. These can range anywhere from 3 months to 5 years. The way CD’s work is that the more money you invest in for longer time, the more yield you get out of it.
• Online checking accounts
Just online saving accounts, you can invest in online checking accounts. It offers no principal-loss, but the down-low here is that your interest rates might take a hit because it is a checking account at the end of the day.
• ETF’s and short-term bonds
Short term bonds are a product of the investment market and will pay according to the market’s current condition. They will have fluctuating monthly payments. Short term bonds mature in 2 years or less.
• Treasury inflation protected securities
Also known as TIPS, these are government bonds that are indexed to inflation. Although offering interest rate as low as 0.5%, but over a period of 5 years, the value of your bond might increase by 2.5% per year.
• Municipal bonds
Riskier than TIPS, municipal bonds have a low interest rate risk. Thus, buy municipal bonds from a brokerage firm that is closer to maturity.
• Paying off a high interest debt
Paying off a debt of $10,000 (for instance) on your credit card might offer you great return on your investment.