Whether you are a young investor or an experienced entrepreneur, you should carefully consider every short-term investment option that you can find. Short-term investing is an excellent way to earn some cash quickly. It is also a safe method to stash your hard-earned money before you need it in your near future. Here are the best ways to invest your money for the short-term.
Cryptocurrencies like Bitcoin, Litecoin and Ethereum are a great option to invest your money in the short-term. For example, you can buy any of these cryptocurrencies and sell them after they rise in value. Selling them even just a few weeks later can help you make a profit quickly. You can find the best bitcoin exchange in Canada and across the world to get the most value for your money.
But it is important to note that cryptocurrencies are extremely volatile. Their value is determined by speculation which makes them a risky short-term investment.
Bonds are perhaps the safest ‘high-yield’ investments in the financial market. They are also considered safe for short-term investing. A bond is an IOU that is issued by the government or a financial institution with a fixed interest rate. So, its returns remain predictable even in a volatile market. Moreover, its market value does not fluctuate much, so it is an ideal short-term investment.
The most common types are Government Bonds (Treasury Bonds) and Corporate Bonds. You can invest in both of these bonds directly with banks or through mutual funds.
Preferred shares are hybrid investments. They combine both equity and fixed income features. They have a fixed interest rate similar to bonds. Yet, they are also similar to equity shares in that they earn dividends and gain in value. This makes them an ideal short-term investment option that is both safe and profitable.
ETFs (or Index Funds) are mutual funds that have thousands of securities in their portfolios. They are relatively cheap to invest in and are popular among beginners in the stock market. ETFs are considered safe for short-term investments because they mirror the performance of the stock market.
Government bonds are also considered a safe way to invest your money in the short term. You can invest in these bonds by buying them directly from the government or from an online bond broker. On the downside, there is little scope for profit in the short term as interest rates are fixed.
Mutual funds also come under the safest way to invest your money in the short term category. They offer a blend of debt and equity through various investment options such as liquid funds, FMPs, and others. This way, you can invest your hard-earned cash to reap short-term benefits as well as long-term ones.
Gold is always considered an excellent short-term investment choice because of its high liquidity and quick turnaround time. However, buying gold can be quite expensive at times because of its fluctuating price. To avoid the hassle of buying gold directly, you can check out Gold ETFs or Gold Mutual Funds which are cheaper than buying gold but give you a similar return on investment (ROI).
Most investors shy away from small and mid-cap mutual funds because they assume that investing in them is too risky in the short-term. However, investing in mid-cap and small-cap mutual funds can be a good idea when you have money to invest but don’t know where to put it. These funds have a higher risk of losing all your money, but they have a higher upside potential too if you have a long-term investment horizon like 5 years or more.
EFTs are mutual funds that invest in stocks listed on an exchange instead of stocks listed on the stock exchange itself, which is what other ETFs do. Both EFTs and ETFs are considered very safe for short-term investing because they rely on stocks that trade frequently on the stock market as opposed to stocks listed on the stock exchange that trade intermittently. However, EFTs offer slightly higher returns than ETFs while having a similar risk profile. You can invest in both of these directly from the stock exchange or through a broker.
Forex trading is perhaps the most profitable short-term investment strategy available. You can make a lot of money from it, but can be risky due to factors that you have to monitor and manage such as exchange and interest rates. This is not recommended for beginners because of the complex nature of Forex trading.
Derivatives are financial assets whose value depends on the price of another asset such as a commodity or stock. If you decide to trade in derivatives, you must do your homework and learn everything there is to know about this market before you start trading in it.
Most people turn to short-term investments when they have expensive plans in the offing like organizing a wedding or vacation. However, finding the best investment idea can be quite tricky. With many markets still destabilized by the coronavirus pandemic, choosing a safe short-term investment is particularly challenging. But we hope this guide has made things a little easier for you.