short-term investment

10 Best Short-Term Investments

As the Covid-19 pandemic continues to ravage the entire world, it leaves an immeasurable toll in its wake, making markets extraordinarily volatile and unpredictable. As such, investors face the problem of what short-term investment to embark on since the contumacious pandemic will not be around forever – hopefully.

All investments, short-term or otherwise, have their risks. Hence, this article comes in handy as the ten best short-term investments that can provide a high return with limited risk will be discussed.

To begin, let us understand what short-term investment means.

What Is A Short-Term Investment?

More than often, investors looking to make a short-term investment do so because they need to get the money at a particular time. As such, short-term investments are those you make with a return expectancy of three years or less.

Under normal circumstances, the stock market goes up an average of 10 percent annually; but the market condition may be volatile. With this, you can project the ups and downs of the market.

Before embarking on a short-term investment, consider your capital’s safety as you may not earn as much as you would make with a long-term investment. Short-term investments, however, can get you your money at exactly when you need it or thereabout.

The risk incurred compared to long-term investments are also limited.

The following are examples of short-term investments that can bring huge returns with limited risks:

Best 10 Short-Term Investments

  1. Online Savings Accounts
  2. Money Market Accounts
  3. Alternative Investments
  4. Certificate of Deposit
  5. Online Checking Accounts
  6. Short-Term Bond Funds and ETFs
  7. Municipal Bonds and Corporate Bonds
  8. High-Interest Debt Pay Off
  9. Cash Management Accounts
  10. Roth IRA

We will examine each of the above in the listed order.

1. Online Savings Account

An excellent risk-limited way to earn interest on your capital is high yield savings account at a bank or credit union. With this kind of account, you can make a substantial amount of interest just for keeping your money on deposit at a regular interval.

Besides creating online savings account to deposit your capital, be aware that this strategy requires little or no effort on your part; of course, your money is the most critical factor here. Opening a high yield savings account offers you the best interest rates without any fee deduction.

Consider opening the best high yield savings accounts with Discover, Citi Bank, or UFB to get the best interest rates. Terms and conditions may apply before you can open an account, but you get to make the best of your short-term investment within your set time frame.

Remember, though, that the FDIC insures savings accounts at regular banks, and by the NCUA at credit unions, your money is as safe as possible, hence the limited risk you face.

TIP! Take your money further, faster. AXOS Bank is an online-only bank offering higher yield savings than traditional banks, in fact, 8x the national average APY. No minimum balance requirements. The opening deposit is $250.

2. Money Market Account

With a Money Market account, investors can access their funds when they need them as they are provided with checks, deposit slips, and ATM cards. The account’s basis is the balance on the account and not the length of investment and pays better than a savings account.

Interestingly, with the above-outlined facts, many reasons that a Money Market Account can be compared to savings account on steroids. What more? There is little or no risk associated with a Money Market account before you can secure a high return rate. While money market accounts are very liquid, federal laws impose several restrictions on withdrawal.

3. Alternative Investments

Alternative investments belong to a group of a diversified portfolio. While alternative investments also have a high return rate, most are not very liquid and may need a holding period of at least two years. A peculiar example of an alternative investment is real estate.

Other alternative investments that operate outside the stock market and have a short-term period include;


Fundraise allows for online, low-budget ETFs for a real estate property. As such, you can acquire and manage each estate property.


Worthy bonds allow you to invest in small scale businesses by buying their bond. As an investor in their company, you are entitled to a 5% fixed interest from their earnings.

Lending Club

Wondering what a lending club is? As the name rightfully implies, they help you buy shares in a company by lending your money to businesses, corporate bodies, or individuals and paying your money with interest.

TIP! LendingClub is the leading peer-to-peer lending platform that has been around for more than 10 years. You can diversify your overall investment portfolio with consumer credit exposure, and spread risk across multiple borrower loans. Plus, you get paid every month.

4. Certificate of Deposit

As an investor, a certificate of deposit allows you to deposit your money for a specific duration in exchange for an assured high return regardless of what happens to interest rates within that timeframe.

Your bank can provide you with a deposit certificate that will be present in bank products such as savings accounts and money market accounts. While getting a certificate of deposit, your consent is given to hold money in the account of a specified period depending on the maturity you require.

You will earn interest on such a certificate of deposit regularly, and while you also get your principal and interest when the specified period elapses. 

While getting your certificate of deposit, be sure to purchase with an FDIC insured financial institution with up to $250k guaranteed. Rest assured that the longer your time of investment, the higher the yield or return.

The only downside to getting a certificate of deposit seems to be that while your principal is tied up for the specified period, you may miss out on a better interest elsewhere. Because of this, you must be sure you will not need your money any time soon because if you want to keep your money as a short-term investment in a certificate of deposit, you may be penalized if you end the certificate of deposit early before the specified period is over.

TIP! Certificates of deposit secure high-interest rates when you agree to leave your money untouched until the CD matures. You can choose your CD’s length, longer terms typically generate more interest. CIT Bank’s CDs range from 6 months to 5 years.

5. Online Checking Accounts

Like your regular online savings account, your checking account can also serve a short-term investment need. Since the number of withdrawals is not limited to an online checking account, you enjoy many benefits, including more liquidity.

More importantly, an online checking account offers you cash bonuses as a deal of sweetener, while interest rates remain relatively low. Be sure to research the best banks that offer the best interests for deposit rates.

TIP! Join 7 million other people and invest your spare change automatically with Acorns. You can sign up for just $1 or $3 per month. You can also earn bonus investments when you shop with 350+ top brands.

6. Short-Term Bond Funds and ETFs

Often, short-term bond funds are managed only by a professional financial advisor. Admittedly, bonds may not be as stable as money markets. Even then, they provide the potential to earn a high return.

With short-term bond funds, you can get your payout concerning the market’s present condition in retrospect to fluctuating monthly payments.

7. Municipal Bonds and Corporate Bonds

These types of bonds are quite different and risky compared to regular bonds. They are issued by major corporations to use the finances to fund their investments, as they are usually paid quarterly or biannually.

Even then, a majority of municipalities do not default on their bonds. The interest’ rate risk’ is termed the most significant of risk because in a low-interest rate locale, when the rate rises in the marketplace, the bond’s value will decrease.

Riskier compared to municipal bonds are corporate bonds. This is because they are not backed by the government on all tiers and are collections of corporate bonds from different companies. Even then, the higher the risk, the higher the possible return as expected.

It is safe to say that even as the government does not ensure short-term corporate bonds. They tend to be relatively safe, especially when a diverse collection is bought as the exposure to unstable interest rates has a trivial effect on the price of te fund.

These bonds are liquid and can be sold or purchased at any given time once the stock market is open. 

Note: Government bond funds are very similar to corporate funds, with the only exception that they are issued by the U.S federal government and have minimal risk since the government will repay the money in the case of any eventuality.

Rising or falling rates do not really affect the fund’s bond price and can be sold or bought anytime the stock market is open.

TIP! M1 Finance is an excellent robo-advising service, a great way to start investing. They offer commission-free trades on 6,000 stocks & funds, free checking accounts and charge no investment management fees. You can invest, borrow and spend your money in one account. For UK readers, we recommend Wealthsimple as the leading robo advisor.

8. High-Interest Debt Pay Off

With a credit card having a 15% interest rate and carrying a balance of $10,000, you get a chance to have a massive return on your investment. That way, when your debt is paid off, you get a 15% return on your paid $10,000.

Interestingly, paying off debts will not only get you a high return but also save you some future costs as you will be securing your chances of getting better credit in the future. The following debts can be paid as a short-term investment”

Credit Card Debt

Most Americans are weighed down with credit card debts. However, employing a well-thought strategy to pay off your credit card debt ultimately pays off in the long run.

Mortgage Debt

Many factors can account for the low-interest rates. Hence, if you are yet to refinance your mortgage, it is in your best interest to do so as quickly as possible. Doing so helps you save as much as possible.

Student Loan Debt

Many students take loans to pay for college and other related expenses. If you took a student loan, you would be saving more in the long run if you pay in time as you get a substantial return. 

TIP! You could save on interest when you refinance a student loan, check out Earnest. They also offer private student loans if you’re looking to get funded for college.

9. Cash Management Accounts

With a cash management account, you can put money in a diverse short-term investment, write checks out of the account, transfer money to and out of the account, and other bank transactions.

Cash management accounts offer you flexibility with your funds, and online stock brokers offer them. While the risk involved in such accounts is limited, be sure you do not exceed FDIC’s deposit limit if you bank with any of such FDIC partner banks because they protect your funds.

Your funds are very liquid and can be withdrawn at your convenience.

10. Roth IRA

With a Roth IRA account, your account is funded with the after-tax income you invest in funds, ETFs, bonds, and lots more, and your money increases as you do. Interestingly, your money keeps growing until you retire from active service.

However, your earnings can not be withdrawn until after your retirement, or you will be fined. You can be sure that your money is safe and will have yielded significant returns after your service.


You never know when it will rain. But with a well thought short-term investment, you can be protected when it pours and have your financial future secured.

Do your research on what will work for you and think outside the confines of the box. Be sure to invest in verified and insured platforms and apply the suggestions provided herein and get huge returns in little or no time.

We explain how you can make money, save money and grow money.

Make money: learn how to build wealth and how to earn money from the internet.

Save money: learn how to save money and how to make budget plans.

Grow money: learn how to invest and trade.

Please note that under no circumstances should any information from this blog be used as replacement for professional financial advice.

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