All over the world, it is risky business for someone to invest his or her own hard earned money. It is rare to see an investment without risk. Nevertheless, though investments have their own risks, the risks can be controlled and minimized with the right information and of course, proper execution.
Many of us prefer to invest for long term because we felt the risk is reduced and the reward is also huge. However, it is also possible to get profits in the short term with minimal risk. And even considering the fact that the market today is unstable, the type of investing that we can call a safer alternative for investors is short term investing.
Investing on a short term basis actually gives chance for investors to invest their money with little or no risk (with them having it at heart that their money won't be tied up for long periods of time).
There are different types of short term investments, here are ten of them.
1. ONLINE SAVINGS ACCOUNTS
An online savings account is a splendid way to guarantee one's investment and not to lose any money while at the same time, generating some little bit of return. With quality online banks, you get a small risk-free return on your investment, and you are guaranteed never to lose principal on your investment (so long you keep your total deposit at the bank below FDIC coverage of $250,000).
2. CERTIFICATES OF DEPOSIT (CDS)
This is a type of savings account that has a specific maturity date (it might be quarterly, annually, etc). Also, it earns fixed interest (and is fully insured with the Federal Deposit Insurance Commission). After it has matured (i.e. after maturity), the full amount and the interest may be withdrawn.
3. SHORT-TERM INVESTMENT FUNDS
This gives investors the opportunity to place funds temporarily on one investment avenue, while pooling their own (or others') resources for a bigger investment scheme (which is usually for the long term). Examples of these Short-Term Investment Funds are corporate notes, government bills, bank notes, etc.
4. MONEY MARKET ACCOUNT
This is another type of savings account that offers high interest rates. Nevertheless, the deposits that are involved are quite hefty as the minimum balance requirement is at least $1,000.
5. PEER TO PEER LENDING
There are websites known as peer to peer lending websites that allow investors to broaden their investments. These websites works as a medium that connect investors to some qualified consumers who are in need of a loan. They allow investors to become the bank. Investors simply purchase notes, and they receive a monthly income (which is in form of loan repayment and interest too). Nevertheless, this form of investment is high in risk.
6. INVESTING IN MUNICIPAL BONDS
These are bonds that are issued by a local government unit or any of its agencies (or instrumentalities). One thing known in this is that, the incomes that are earned on bonds as these are tax exempt hence their appeal.
7. INVESTING IN STOCK DIVIDENDS
Stock dividends are income that is earned by shares of stocks in a company. Investors should know that stock dividends are actually controlled by the profits of a company as well as the type and amount of stocks they have. Therefore, what this means is that, the potential for earnings are actually high particularly if the investor's stock are substantial and also have preferential status.
8. 5-YEAR TREASURY INFLATION PROTECTED SECURITIES
Treasury Inflation Protected Securities (TIPS) are government bonds that are indexed to inflation. Despite the fact that the interest rate on a TIPS is fixed, the underlying value of the security is known to rises with inflation as measured through the Consumer Price Index.
9. FIXED SAVING DEPOSIT
Fixed savings deposits are secured and 100% insured. Therefore, any money that is invested should be returned irrespective of the circumstances. Nevertheless, the fixed rate depends upon the maturity date and the total amount of deposits.
10. FOREIGN CURRENCY DEPOSITS
This is another form of short term investment. The types of deposits that are known as foreign currency deposits actually involve a foreign currency of whatever type (so long the market for that currency is high). When it comes to foreign currency deposits, in most cases, there is an absolute confidentiality clause.