Taking into consideration the ongoing market trends, investors might see short-term investment as the best plan to execute to get higher returns. This is explained by the fact that an investor can invest his/her money, whether $10,000 or $100,000, with a very less risk and a belief that their money will be available to them as and when they require it.
Upon reaching maturity, within a period of few months to few years, any short-term investment has the ability of being converted into cash or another type of investment.
A list of short-term investment ideas available today is as follows:
- Peer to Peer Lending
A number of Peer to Peer lending websites are available on the Internet. Provision is made for all the consumers looking for a loan to collaborate with the respective investors so that a small percentage can be made available to them in the form of loan similar to the way a bank works. Added benefit of this service is that higher returns have been earned by the lenders who can set their own interest rates and can also compete for the lowest rate. Also, borrowers can borrow money at lower interest rates.
- Roth IRA
Roth IRA cannot be considered as an investment. On close examination one might see that Roth IRA is actually funded by after-tax income. It aims to break the pattern of the traditional retirement accounts where one is bound not to withdraw money before retirement just to cover the risk of a withdrawal penalty as well as the risk of income tax. It is actually an advantage for people with low-income as they can withdraw money at any time without hesitation and can also avail the benefit of savings.
- Certificate of Deposits (CD)
A certificate of deposit (CD) allows a depositor to invest his/her fund for a certain mentioned time period at a specific interest rate. The funds deposited by this method are made available once the fixed maturity date has arrived. A least investment the amount is made in the denomination of one’s own choice. An array of terms is provided by Wells Fargo and other banks for their respective deposit accounts, spanning from 3 months to 5 years. Merits of a CD are that the longer the time period, the higher will be the interest. Secondly, one can also receive monthly interest payments if he/she desires.
- Checking Accounts (Online)
Online Checking Accounts offer a depositor an edge over a savings account. As the number of withdrawals is not fixed and the interest rate offered is comparatively low, depositors tend to find it flexible and liquid. Both withdrawals and deposits is made at any financial body and are now user-friendly via checks, electronic debits and various other methods. A running balance is maintained to assess the money in your account. These are the easiest mode of payment for bills and transactions. These can also be referred to as demand accounts or transactional accounts.
- Savings Account (Online)
Online savings accounts are quite safe as the interest rates are low and a risk-free return is assured. Moreover, some online banks even allow the depositors to withdraw money 6 times per month making it convenient and user-friendly. Routing number is essential for various kinds of transactions for Savings and Checking Accounts. You can check out the routing number for Wells Fargo and other banks online. If the total fund at the bank is kept below the FDIC coverage of $250,000, the depositor is assured a no-loss deal. The money in a savings account is usually accumulated and has the potential of being used in the future or in case of an emergency. The money in a savings account is thought to be safe even when the bank deduces its annual fee just so to maintain your account.
- Short-Term Bond Funds and ETF
In times of increasing interest rates, one might find short-term bond funds as a safe method of investment as compared to a long-term bond fund as the risk of negative returns are greatly reduced and chances of a high earning are increasing. These funds are investor friendly as the maturity period ranges from 2 yrs or even less. In order to trade bond funds and ETF, a brokerage account is vital. This includes Scot trade, Betterment or E*Trade, and has been managed by efficient and skilled professionals.
- Paying Off those High-Interest Debts
One can act smart enough so pay off high-interest debt on their own to deal with their finances or can involve financial tools such as Mint for the same purpose.
This has been explained by taking into consideration the case of a credit card holder maintaining a balance amount of $10,000 and an interest rate of 15% aiming to get a high return on his investment. Paying off this debt has been simulated to getting a 15% return on your $10,000.