Looking to invest your capital? If so, you may want to focus on the most appealing short-term investment options.
The reason is simple: the stock market is as unstable as it gets right now. Add the low interest rates, and it’s clear that long-term investments are too risky at the moment.
Meanwhile, short-term investments allow you to increase your revenue with little risk. The typical short-term investment grows for up to several years. Once it reaches maturity, you can turn it into cash or other investments — no strings attached.
Not sure where to start? Here are our picks for the five best short-term investments to consider.
1. Certificates of Deposit
Certificates of deposit (CD’s) allow you to invest your cash for a specific length of time. The longer your investment term is, the higher your yield will be. Most investment terms last between three months and five years.
The only downside to a CD is that you need to pay a fee to pull money out before the maturity date. The fee is often equal to three months’ worth of interest.
2. Money Market Accounts
A money market account is quite similar to a CD. Still, there are some key differences.
For starters, money market accounts aren’t based on investment terms. Instead, they revolve around your account balance. Money market accounts also come with checks, ATM cards, and deposit slips.
At the moment, these accounts are paying a close APY to one-year CD’s. If CD rates start rising, you can move the cash from your money market account without paying the penalty.
3. Bitcoin Mining
Bitcoin mining is all about guessing a random number generated by the system. The more powerful your computer is, the more guesses you’ll be able to make in a second. Each correct guess earns you bitcoins.
Now, is Bitcoin mining profitable? That depends on many factors, including pool fees, hash rate, and power consumption. If you want to know more about this type of investment, take a look at this Bitcoin mining blog.
4. Treasury Inflation-Protected Securities
These securities (also known as TIPS) are government bonds that protect you from inflation. The interest rate is fixed, but the value of the security still depends on the consumer price index.
By their nature, TIPS won’t make you rich on their own. If your interest rate is 0.5 percent, the value of your bond may increase 2.5 percent over five years. At the end of the term, you’ll earn a small bit of interest on top of your initial investment.
5. Peer-to-Peer Lending
Looking to spread out your short-term investments? Peer-to-peer lending websites may be what you’re looking for. These sites connect you to qualified consumers in need of a loan, allowing you to become their bank.
Many such websites set the interest rates based on specific criteria. This is good news for lenders since it reduces the risk for default. The exact amount of money you should invest depends on your investment timeline.
More on Short-Term Investment Options
These are just some of the more popular short-term investment options at your disposal. These days, the World Wide Web is home to many innovative online platforms. Thinking outside the box is not only allowed — it’s encouraged.
Interesting in learning more about the ever-changing world of investing? You may want to drop by our blog!