Why the Best Short Term Investments are so Appealing

There are plenty of people looking for short-term investments. These types of investments help people get good rates of return in a short period of time. Sometimes it can be as short as a few hours to as long as five years. However, while there are many different types of short-term investments, most people looking to invest their money in this way often find themselves wrestling with the question as to what are the best short term investments to make. Here are a few things to consider.

Things such as currency trading or FOREX trading is a great short term investment. These types of investments, typically pitting one currency against another in terms of value, may be investments that a person only holds for a few hours, or a few days at most. Short selling is another option that offers a fairly quick turnaround. Day trading is also a way to potentially profit on short-term investments. Unfortunately, these types of investments carry with them a great deal of risk, and it’s easy to lose all of one’s investment capital if one of these types of trade should go south.

Good short-term investments are also investments that help reduce risk. For example, Series 1 savings bonds, also called I-Bonds, are an excellent way to receive short-term returns on investment while minimizing risk. The reason why the risk is minimized is because these bonds are backed by the federal government. This is actually a way in which an investor loans money to the US government. The average rate of return at present is around 1.64%. While that may not seem like a great deal, the returns also figuring any increases in inflation.

The terms of these investments allows a person to draw cash money out of the bonds after one year with a mild penalty. After three years, that penalty is even less. If a person holds these bonds for five years or more, drawing money out of these bonds is penalty free.

This is simply one of many types of short-term investments. Along with these are Roth IRAs, certificates of deposit and even bond funds. What is right for you will depend on how much you’re looking to get in terms of returns and how long you want the short-term investments to run for. Regardless, there are ways to invest in the short-term in order to see a handsome ROI.