Different Options For The Best Short Term Investments

by Caleb James on 19 Aug, 2012

From time to time, we all have a sum of money in our possession for a short period of time. This might be an insurance payout or a bonus from work that you need to keep safe for a short period of time before you spend it. This might be the money for a new car, a holiday or some home improvements.

Normally, you might just put this money in the bank until you need it, but it makes more sense to invest it A bank account is safe, but interest payments on current accounts are low and most savings account need longer investments to see a decent return.

Stocks and Shares

The Stock Market is a popular investment tool, but analysts usually recommend it for long term investments. However, it can be a great way to give a great return on your money. If you choose the right shares you can make a big return, but at the same time you could also end up losing money if the share prices fall.

As the stock market can be volatile, it might be better to invest in a fund that invests in a range of shares. These are more resistant to any sudden swings in share price than a single stock, but will also give less of a return than a single share can.

Any investment in the stock market can be risky, so it is always worth discussing the issue with a broker before handing any money over.

Precious Metals

One of the safest investments over the years, particularly in times when the economy is uncertain, is precious metals. The prices of gold, silver and platinum all increased after the start of the credit crunch. However, like the stock market, the price of precious metals depends on demand and can fall. Storage of the metal could be a problem, but most brokers can buy, sell and arrange storage for you.

Short-Term Loans

Another new short term investment is to lend money through a private investment. Several websites exist to mediate these investments and you can choose the level of risk and return you are willing to take. The borrower pays the money back after a short term along with interest. Like all loans, there is a risk that the borrower will default leaving you out of pocket.

These best short term investments might not be suitable for everyone, but offer a great opportunity to make a profit on any free money you have for a short while. It might not be as safe as a bank account, but can give you a significantly better return on your money.

About the Author

Caleb James

Caleb James is a financial advisor and journalist, who contributes regularly to financial blogs and industry publications.