Short term investing is something that you can perform at any age. You may try short term investing as you get used to the investment market, or, you could even look at short term investments as a way to increase your wealth as you get closer to retirement. Whatever your reasons for wanting to invest in short term accounts, you’ll need to know the best ones that can deliver results.
Here are three suggestions that are perfect for general saving and wealth building, or even for a late boost to retirement savings.
Pay off Your High Interest Debt
Paying off high interest debt early can increase your wealth, and it’s something that many individuals and families overlook. A high interest debt account, whether it’s a loan or a credit card, can cost hundreds or even thousands of dollars in the long term. This will limit how much wealth you can grow in the future.
If you have residual income and are thinking about investing, then you should first consider paying off your larger and more expensive debts. Calculate the interest over the remaining term of the debt to find out how much you will save. Once the debt is paid off, you’ll have a higher net worth and more money to use for new investments and savings accounts.
Buy Bonds from an Online Brokerage
Although any investment comes with some inherent risk, you can reduce that risk by only investing in tightly controlled bonds. Government bonds (both federal and state) are often seen as safer alternatives to investments in the stock market. Church bonds are also favored by investors who want something that is low risk for a short to mid length investment period.
Bonds can be purchased from online brokers or through your own investment broker if you already work with one. Note that bonds can lose value with interest rate increases, so you could lose some of the potential return on bonds that are purchased in 2018. Take this into account when looking at future return projections.
Invest in a High Interest Online Savings Account
Interest rates on standard savings accounts are typically low, but there are better options when you consider high interest online based accounts. You can often get up to 1% return on deposit accounts with online banks and money markets, or, you could consider a certificate of deposit with a local bank to get even higher interest rates.
Be aware that a certificate of deposit will usually run for a term of at least one year, during which you won’t have access to the money. Investing in one of these for 3 to 5 years is a great short-term investment and the interest can be compounded and put back into the deposit, ultimately increasing your gains.
You Don’t Always Need to Think Big with Investments
When most people think of investments, they think of long term programs or ongoing investments in a single market (such as the stock market). The reality is that there are many short-term investments which can be used to increase your wealth in a short period of time, and they’re a great way to diversify, improve a retirement fund, or even work towards other goals.
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