Mutual funds are still beholden to economic volatility. Pro tip: Don’t invest in mutual funds if you’re worried about current market volatility, like dramatic stock swings or market forces that may have a negative effect on stocks and bonds. Short-term mutual funds have more conservative investments, but that also means you may not make as much of a profit compared to a long-term investor who is willing to take on risk. There are plenty of mutual funds out there, so you’ll have to do some research on the best mutual funds for your short-term investing portfolio. This makes it a good option if you want to invest in bonds but would like more flexibility with withdrawing money if you need it for short-term issues. Bond funds have a good mix of different bonds to give you a more diverse bond portfolio than if you were buying specific ones on the market.īond funds also don’t have the same time restrictions that a municipal or corporate bond would have. Short-term bond fundsĪ bond fund is a mutual fund that invests only in bonds, such as those offered by government entities or corporations. If you want more reassurance in your returns, you may want to avoid the corporate route. These are issued by corporations, which makes them riskier, but they’ll usually also have a higher interest rate. Pro tip: If you’re interested in adding bonds to your portfolio, you also may want to consider corporate bonds. Consider checking with your local or state government to see if they’ve issued bonds that you can invest in, which also helps you contribute to improvements in your own community. You can find municipal bonds with term limits that are specific to your investing needs depending on when you need the money back. Some people are more comfortable with this kind of investment since they are backed by municipalities. Municipal bonds are issued by government entities at a state or local level to fund projects like road construction, new schools, or other community improvement projects. Then you can consider a variety of different maturity options for when you need the money back in your pocket. Investors who want to stick with Treasury bills for more than a year can think about reinvesting their funds when the bills mature. The farther the date, the higher the rate. ![]() They also have a variety of dates for when they mature - anywhere from a few days to a year. government that could be used for things like building schools or new highways. Think of these bills as loans to the U.S. Unlike bank-issued options, Treasury bills are sold to investors through the United States Treasury Department. If you’re looking for liquidity, be aware that money market accounts may have withdrawal restrictions, so plan accordingly when considering when you need that money available to you again.Ħ Brilliant Ways to Build Wealth After 40 These accounts may include investments such as government securities and CDs that have a stable rate of income, while also earning more interest than a typical savings account. Money market accounts are also offered by banks and credit unions, and sometimes have a return rate slightly higher than a savings account. ![]() Pro tip: Shop around to find the best CD accounts for your particular timeframe that may still give you the best rate of return. You also have to agree to hold on to the CD for a specific amount of time, so liquidity may be an issue. The good news is that you get a specific interest rate when you open a CD that will never change during its duration, but that could be a bad plan if interest rates go up while your particular CD rate doesn’t. There are a few advantages - and disadvantages - to short-term investing with CDs. Banks will offer a higher interest rate for CDs because you’re locking that money in, which makes CDs more appealing than a typical savings account. Certificates of depositĬertificates of deposit, or CDs, are options sold by banks that allow you to deposit your money for a specific amount of time. Pro tip: Check out our list of the best savings accounts to find one that suits your goals and financial situation. Keep an eye on any potential restrictions that some banks may put in place, such as how your money can be transferred in and out of the account or if a minimum balance is required. Your cash can earn interest while it’s in the account, and you can pull it out when you need it. One major advantage for short-term investors is that it easily checks the box for liquidity. With online banking, it’s easy to open an account and transfer your cash in. Check online and compare interest rates for savings accounts with different banks. A high-yield savings account could earn you a little more. With interest rates so low, you won’t be making much if you don’t purposefully put money where it could deliver gains. With that in mind, here are a few different ways to make money that could fit your short-term goals.
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