Handpicked resources for the best short-term investment options of 2020

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short-term investment options of 2020

Investing is a great way to increase your net wealth. If you have saved a good amount of money by following a strict budget, proper financial planning, and using money management skills, then you must invest that money to earn profit and grow your net worth with time.

Through investing your funds, you may generate a source of passive income. 

By using that money you may contribute to different categories such as your vacation or travel fund, or into an emergency fund, or make down payment for your car.

You may also fulfill your prime life goals by using profits earned from investments. Prime financial life goals may include – high-interest debt settlement, getting appropriate insurance coverage, or contributing to your retirement saving account.

Settling high-interest debts, especially payday loans or credit card bills are quite difficult. Additional money will be required, along with a strong budget plan to get relief from unsecured debt issues.

So, without strong investment strategies it is not possible for you to get financial independence being a newbie investor!

So, additional money will be required, along with a strong budget plan to get relief from unsecured debt issues.

Types of investments that you may choose

According to professional investors, there are two prime options you can choose: 

  1. a) Long term investment options
  2. b) Short term investment options

Long term investment options have a higher rate of ROI (return on investment). But it also comes with high-risk factors and long processing time. 

On the other hand, short term investment options are quite easy to access, carrying low-risk factors and are short processing time to get ROI. 

Practically, a short term investment can give you a profit in fewer than five years. You must consider the fact that the ROI rate of a short term investment option is lower than a long term investment option.

If you’re looking to invest money in the short term, you’ll require a safe option, with the facility to liquidate your money shortly.

Here are some of the best short term investment options for 2020:

1. Lending Club

Lending Club is a popular Peer to Peer lending platform where you may easily invest in loans, particularly in companies and individuals. The tenure of the loans on this platform will be mostly three or five years. So, if you have the objective and enough time to invest your funds in a safe short term investment platform, Lending Club is the right option for you.

2. U.S. Government Securities

Treasury securities are typically bonds that are issued by the U.S. Treasury. It is also backed by the federal government’s credit. You have multiple options to invest from a variety of treasuries. The U.S. Treasury may offer you good securities with maturities of five years or less. 

Types of U.S. government securities include:

  • Treasury bills – These bills will mature within one year or less
  • FRNs (Floating rate notes) – These notes have variable interest rates
  • Treasury notes – Such securities may mature between 1 to 10 years
  • TIPS (Treasury inflation-protected securities) – Practically have five-year maturities. The principal amount is normally adjusted as per the ups and downs in the consumer price index.

TIPS are generally securities “indexed to inflation” and the underlying value depends on the consumer price index (CPI). The ROI of TIPS is between 0.5% and 2.5% (time frame 5 years). It is a safe short term investment option as your investment is protected from probable changes caused by inflation.

3. Municipal Bonds

Municipal bonds are generally issued by local, state or government agencies. It is quite a similar option like treasury securities where you may invest money in the federal government projects. With municipal bonds, you can lend money to local, state, government agencies such as municipalities. Municipal bonds have pretty high yield potential if you hold on to your bond until its maturity. 

5. Paying Off High-Interest Debt

This is a great option to get a quick, high ROI. Paying off high-interest debt like payday loans or credit cards is a wise decision because you can get a great return while improving your finances.

Since you decide to improve your financial situation, take it upon yourself to stop using all of the credit cards and lines of credit that you’ve gathered over the years. Although you shouldn’t go overboard until you have settled all of your debts.

By paying off high-interest debts totally, you may :

  1. Making space in your monthly budget
  2. Saving a good amount from interest payment, consider it for the long-term.
  3. Using a balance transfer method you can avoid interest payments.
  4. By paying off credit cards, you are feeling up the credit limit.

6. Certificates of Deposit (CDs)

A CD is offered by banks and credit unions. Money deposits in CD may give you high interest for a particular length of time. The period might last from 3 months to 5 months, and sometimes more than a year. 

The trick is, the more you can keep patience, the higher the interest rate. But don’t forget, if you want to withdraw the money before the CD term expires, you have to bear a penalty charge. Make sure you get your CD with an FDIC insured financial institution, there your CD will be insured up to the amount of $250k.

The prime benefits of CD’s

  • Safe to invest as it is insured by FDIC up to $250k
  • The minimum investment amount is $1000
  • The annual percentage yield is 1.85%

7. Roth IRA

A Roth IRA is financed with after-tax income. That’s why you can withdraw the contributions, which you made at any point in time, absolutely free. Don’t forget, you cannot withdraw the money that you’ll be earnings, or else you will be fined severely!

End Notes

Investment options are easy to find but difficult to choose. If you have any confusion on how to choose a short-term investment option, then you should consult a professional and avoid making investment mistakes as a newbie

Patricia Sanders Patricia Sanders is a financial content writer. She has been praised for her effective financial tips that can be followed easily. Her passion for helping people who are stuck in financial problems has earned her recognition and honor in the industry. Besides writing, she loves to travel and read various books. To get in touch with her (or if you have any question regarding this article) email her at [email protected]

8 Replies to “Handpicked resources for the best short-term investment options of…”

    1. Thanks a lot for your appreciation. I am glad that you liked my article, I hope I have rendered enough information that may become helpful for you.

  1. I really like this post because I learned more about the different ways to invest and short term versus long term investing. I have money automatically taken out for an IRA and investment account. Thanks for the great information!

    1. Hi Heather! Thanks for your feedback. Yes, you have done the right thing by setting automatic fund transfer to the IRA and your investment accounts. Good luck.

  2. I’m very conservative so CDs are the way to go for me but lately I’ve been considering other options so I appreciate learning what you all shared in this article!

    1. Hey Lisa! Thanks for the feedback. It’s an honor that you have considered one of the ways to invest in short-term investments. Good luck 🙂

  3. I think long term investment is the best as it tends to bring more profit.
    But this is the first time I’m hearing about short term investment.

    1. Thanks for your valuable response. Have you tried any of the short-term options lately?

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