Short term investments is a term used to describe a position in trade that lasts only for a limited time i.e., from several days to a few weeks or even to a few months. These investments can be made out of your savings, as a portion of savings is mainly used to invest. It is best suited for people who want to make money in a matter of weeks or months instead of years. For a person looking to take advantage of the present market conditions or interest rates, short term investments is the preferred option.
Some of the easily available short term investment options are money market mutual funds, bridge or swing loans. Money market funds are investments in low risk government securities. As these are not federally insured, their prices tend to change. Yet another option for meeting short term investment needs is the CDs (Certificates of Deposit).
There are many advantages of short term investments, the main one being the potential for fast growth. These investments give you control over your money. These investments have a few drawbacks as well. A short term investment tends to be more risky than a long term investment because of the higher rate of fluctuation. There is no guarantee when the bottom will fall out and the value of the investment starts dropping.
Short term investments must be handled carefully as the timing required to get the best benefit from it is very precise i.e., even if you miss a purchase or a selling opportunity it can make a big dent in the value of your investment. In addition, you must also be watchful while selecting your entry points. There are many agencies and firms providing assistance in these investments.
