What Investments Are Suited for Short-Term Investing?
Depending on your tolerance for risk, there are many types of investments at your disposal for the short term. If you don’t have a high tolerance for risk, you might want to consider a money market fund. A money market fund is one that invests in low-risk government securities such as Treasury bills and commercial short-term loans. Unlike other bank or credit union investments such as certificates of deposit, money market funds are not federally insured and can change in price. These changes are usually minimal, however. Money market funds are highly liquid (meaning they can be converted to cash). For a short-term investment with very good liquidity, yet with higher returns than money markets, you can invest in short-term bonds. Short-term bonds tend to have regular interest payments, but their prices on the market can fall when interest rates rise.
