Some examples of which include government bonds, ETF shares, development loans, high float shares, and stocks that have decreased in price due to recent stock market corrections.
Best Short Term Investments:
Let's start with the simplest, liquid investments.
Liquid investments can be quickly brought and sold and can be used to temporarily store capital.
For example, if you have disposable income that you're looking to store until you find the appropriate long term investment, you may want to invest your funds into liquid investments. That way, as soon as you find a potentially lucrative long-term investment, you'll be able to quickly sell your shares and reinvest the proceeds.
One reason why it's far smarter to store your funds in liquid investments, instead of the bank is that liquid investments typically offer much higher returns than banks.
Some liquid investments which you may want to consider include:
- Government-issued bonds
- High float stocks
- Shares in ETF funds
We'll get into the 3 of these below.
Government bonds are popular with short term investors due to their low volatility and consistent dividends. If you're looking to invest money in the short term and don't want to take unnecessary risks, it's well worth adding government bonds to your growing investment portfolio.
It's also a great idea to invest a portion of your available funds into government funds to balance out riskier investments in specific stocks.
When you invest in shares in an ETF fund, you're investing in a fund that owns shares in a wide variety of businesses.
Most ETF funds own shares in a specific industry or region.
For example, while you can purchase shares in ETF funds that boast shares from the top 50 companies in the US, you can also purchase shares in ETF funds that feature shares in the healthcare industry or in Asia.
As ETF funds are highly diversified investing in them lowers your risk as an investor and is a wise idea if you're looking to invest funds in the short term.
Generally speaking, ETF shares are always in demand and you won't have any trouble finding a buyer for your ETF shares when it's time to sell.
They are also a smart investment as most ETF funds offer regular dividends and ETF shares typically appreciate in value from month to month.
So even if you only hold your ETF shares for a couple of months, you're still likely to make a competitive return from your short-term investment.
High float stocks:
Unlike low float stocks, High float stocks have a large percentage of shares that are available to purchase on secondary markets.
As high float shares are readily available, if you want to sell your shares at any point in time, you'll be able to sell your shares within 24 hours.
When it comes to choosing float stocks for your investment portfolio, opt for stocks that boast a high rate of capital appreciation or high dividend yields.
Stocks that have recently reduced in price due to a stock market correction:
If you're looking to make a short-term investment that may give you the opportunity to double your initial investment in a short space of time, ensure to purchase stocks that have recently dropped in price, due to a stock market correction.
This is especially good as most stocks that are reduced in price due to an unexpected stock market correction tend to make a full recovery within four months.
Some stocks even make a full recovery in less than a month. Just make sure the stocks that you end up investing in are resilient and are likely to bounce back quickly from a stock market correction.
If you're lucky you may make more than 100% profit on your initial investment.
Peer to peer lending opportunities:
If you've already invested in most of the investment opportunities which are listed above, you may be interested in further diversifying your investment portfolio by experimenting with peer to peer lending platforms.
As an investor, you'll be able to lend capital to applicants who are looking for short term loans. One of the advantages to investing in peer to peer lending platforms is that you'll make a high return on your investment.
If you're concerned about the risk of lending money to strangers, most peer to peer lending platforms ensure that each loan is comprised of money from numerous investors.
For example, when you choose to invest a sum of $1000, you may end up loaning $50 to 20 individuals or $5 to 200 individuals. This will decrease the risk of one of the individuals which you loan money, defaulting on their loan repayments.
While there are quite a few peer-to-peer lending companies out there, the ones we tend to recommend are:
People with average credit scores
3 or 5 years, but payoffs can be done quicker
People with High Credit Scores
3 or 5 Years
Best for Younger People
3 or 5 Years
Certificates of deposit:
Certificates of deposit which are also known as CFDs are offered by banks and offer higher interest rates than traditional savings accounts as they lock in your funds for a negotiated period of time.
Depending on your choice of bank, you may be eligible to receive regular interest payments over the course of your loan.
Alternatively, you can also collect your interest when your CFDs mature.
In conclusion, whether you're interested in short term investments in order to make the best possible return on spare capital which you're looking to save or you're interested in doubling your investment, it's well worth investing in all of the short term investments which are listed above.
If your primary goal is to double your investment, ensure to invest in high-value stocks that have recently decreased in price due to a stock market correction. As they're likely to soar in price within a short time frame.
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