5 Short-Term Investments for Your Money

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So, you have some money and are looking for a place to invest it? Great!

You have quite a few options for short-term investments. Some are riskier than others, and you’ll have to decide what amount of risk you’re willing to accept.

Of course, the riskier investments almost always open the door to higher earning potential. You’ll have to do your best to mitigate risk by diversifying your investments. Having financial security is important in most cases, but those who want the chance at a high return will have to accept increased risk.

Ahead, we’ll take a look at five short-term investments you can make with your money.

Term Deposits/Savings Accounts

We’ll start our list with one of the lowest risk/reward investments you can make in the short-term. Savings accounts and term deposits will incrementally grow your funds, though not as quickly as most of the other investments on this list.

The reason we included term deposits and savings accounts, though, is because you can easily withdraw money when you need it. You’ll see some interest in the short-term, then withdraw your money when you need to make a large purchase or switch your investment.

Of course, interest rates in Australia aren’t very attractive right now. Still, these simple investments give you a bit more freedom and security than some of the others.

Property

Investing in property could be one of the best short and long-term investment decisions you can make. You might want to flip a house quickly after renovating or rent it out to earn passive income over time.

Either way, you’ll likely make money on property investment. Even if the property takes a hit in its value, you can always hang on until the market rebounds. Property prices rise and fall, and cashing in on a high point can net you some sizeable profits.

You will have to do a lot more research with these investments than some of the others since timing is everything when it comes to buying property. You want to purchase a piece of property when the market is low, and then sell or rent it out when it goes up again.

Paying off High-Interest Debt

One of the best short-term investments you can make will be reducing the debt you currently have – especially at a high-interest rate.

Credit cards, loans, and other debt you might have at a high-interest rate will be a leech to your wallet. Maybe you had bad credit at one time and have since improved it. There’s no reason to continue paying high-interest rates when you have the funds to clear your debt.

Keeping some debt at a low interest rate isn’t a bad idea. You can usually find an investment that will net you more of a return than your current interest rate. In these cases, it makes more sense to use the funds on short-term investments rather than paying off your balance.

When the interest rates are high, though, you should consider paying off your debt. Investments won’t keep pace with the rate at which your interest is accruing, so paying the funds back represents a positive return on investment.

You’ll also be saving yourself money in the long run, freeing up future funds for other short and long-term investments.

Equities

Investing in equities is risky, but it can pay off in the short and long-term.

Those who are looking for a quick profit on their investment will likely gravitate towards the riskier investments as well, but that isn’t always a bad idea. You should only invest money that you’re willing to lose, but you could end up with a good chunk of profit if you invest properly.

Equity investments like shares perform better over time than they do in the short-term. Riding the waves up and down usually pays off, but so can buying low and selling high.

You will need to do a fair bit of research in these public companies before you jump into the market, though. Investing blindly is a recipe for loss.

Bonds

Bonds are by no means the most exciting form of investment, but that’s not a bad thing. Sometimes the most boring investments are the safest, and this is the case with government bonds and other forms of fixed income investments.

A bond allows you to loan money to the government with a fixed interest rate. The amount you earn will depend on the length of your bond and how much money you invest. These are often more of a long-term investment, but you can use them as shorter-term investments as well.

The best part of bonds is that they’re stable. You don’t have to worry about losing money over time, as this isn’t a possibility.

The trade-off is that you won’t have the same earning potential as other investments. Some investors will prioritise safety, though, and bonds will work well for them.

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