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 term 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 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. If you are someone looking for an investment for the short haul, you should definitely look into money market funds as the have a long and proven track record.

Keep in mind, it is always good to diversify your investment portfolio to help gains an minimize risk.

Money market accounts and money market funds are similar types of shorter investments. The Money Market Accounts are usually offered by banks while the Money Market Funds are usually offered by brokerage houses. The MMA usually has a lower rate of return but is safe because it is backed by the FDIC while the MMF is not. The MMF is usually very secure though because the managers typically invest in certificates of deposit and mutual funds.

Certificates of Deposit

Certificate of deposits are offered by banks and are usually completely safe because they are backed by the FDIC. They do not pay out the type of return that other types investments but what you do not gain in interest you gain in security. Typically CD’s are offered in terms from six to sixty months.

Traditional Savings

There is the traditional savings accounts that are also considered good investment options. These types of short term investments usually pay the lowest amount of interest but are the safest vehicles.

Understanding the various terms and conditions of the types of short term investments is important when you are making your choice of which investment to choose. The terms and conditions of the investments vary widely and the variance can make or break your financial goals. If you are unsure of which types of short term investments are right for you, than consult with a financial planner that can best advise you. It is always better to seek advice if you are uncomfortable in your investing ventures.

Folks always ask “what are the best short term investments?” and the answer is really quite simple. It is an individual preference. The best 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 haul 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 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.