Hey there, priceless peeps! 🐥
Are you curious about the most profitable avenues for short-term investments? Today’s newsletter has got you covered! This week, we’ll be delving into all the crucial details you need to know about short-term investing. Discover how it can help you earn higher returns on your hard-earned money, far greater than a typical savings or checking account. Keep reading to get the scoop!
– Priceless Tay 💜
🤫 Let’s fill you in on the secret
If you’re looking to stash some cash for the short term, you want to make sure it’s safe and sound until you need it. With the economy facing all sorts of challenges like high inflation, a banking crisis, and a potential recession, it’s no wonder folks are hesitant to invest in anything too risky.
Short-term investments might not offer the biggest returns, but they’re a smart way to keep your hard-earned cash secure. You won’t have to worry about losing it all on a gamble. Safety first, amirite? 😉 So, let’s dive into the world of short-term investing and learn how to keep your money safe while still making a little extra dough.
Let’s start with the basics… What is a short-term investment?
Short-term investments are perfect for those moments when you need cash on hand for specific expenses, like a down payment on a house or a dreamy wedding. Typically, these investments last for less than three years.
But if you’re in it for the long haul (think three to five years, or more!), stocks might be more your style. Sure, the stock market can be a bit unpredictable, but over time it has shown to offer some serious returns. Historically, the market has grown an average of 10% annually. So, if you’re willing to ride out the ups and downs, you could see some serious cash in your pocket. 📈
When it comes to short-term investments, safety is key. 🔑 But here’s the catch: you might not make as much moolah 💸 as you would with long-term investments.
Now, let’s chat about the perks of short-term investments. First off, they’re super liquid, meaning you can get your hands on your dough whenever you need it. Plus, they’re usually less risky than long-term investments, so you can breathe easy knowing you won’t lose it all. It’s a win-win, if you ask me. 👏😇
Now let’s get into what you came here for… Where should you invest your hard-earned cash?
Here are a few of the safest short-term investments to consider that will offer you some return on your cash 💰⬇️
1. High-Yield Savings Account
If you want to save money and earn interest on it, a high-yield savings account at a bank or credit union is a smart choice. It’s better than a checking account where you earn little to no interest. This is great for people who don’t want to risk losing their money and need it quickly. Don’t worry about losing your money because banks and credit unions are insured by the Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA).
2. Money market accounts
Money market accounts are a type of bank deposit that usually pay higher interest rates than regular savings accounts, but require a higher minimum investment. They are good for those who need access to their money in the near future without any strings attached. To minimize risks, find an FDIC-insured account and be aware of inflation over time. The main reward is the interest earned on the account and the ability to access funds quickly. They are highly liquid, but federal laws impose some restrictions on withdrawals. You can open an account at banks or credit unions.
3. Short-term U.S. government bond funds
Government bonds are like corporate bonds, but are issued by the U.S. government and its agencies. Short-term government bonds are good for risk-averse investors who want a very safe investment, while bond funds are good for those who want a diversified portfolio of bonds. The bonds are considered low-risk because they are backed by the full faith and credit of the United States, and rising or falling rates won’t affect the fund’s bonds much. Government bond funds pay a reliable rate of interest, but not as much as corporate bonds. They are highly liquid and can be bought and sold on any day that the market is open. You can purchase them through any online broker that offers ETF and mutual funds.
4. Treasurys
Treasuries are backed by the U.S. government and come in three types: T-bills, T-bonds, and T-notes. T-bills are short-term and last up to a year. Buying individual Treasuries is better for investors who know exactly what they want. Individual Treasuries are not backed by the FDIC but are considered very safe. Treasury bills are very safe but have lower yields. They are the most liquid bonds on the exchanges and can be bought and sold on any day. You can buy Treasuries from TreasuryDirect.gov or any broker that allows the purchase of individual bonds.
5. No-penalty certificates of deposit (CD)
No-penalty CDs are like regular CDs, but you can withdraw your money before the end of the term without paying a fee. They’re good for people who want to earn interest on their money but may need access to it before the CD matures. The risks are low as they’re insured by the FDIC, but low-interest rates may not keep up with inflation. They offer higher returns than savings accounts and money market accounts, and you can find them at your bank.
6. Short-term corporate bond funds
Short-term corporate bond funds are a type of investment that involves buying bonds from large corporations. They are considered safe and pay interest regularly. They are good for investors who want a diversified portfolio of bonds without analyzing individual bonds and those who don’t have enough money to buy individual bonds. Short-term bond funds have less risk exposure to changing interest rates, making them a good option for risk-averse investors. While they are not insured by the government, bonds tend to be safe when bought in a diversified collection. A bond fund will pay interest regularly and is highly liquid, so it can be bought or sold on any day that financial markets are open. You can purchase them from online brokers that offer ETFs and mutual funds.
What makes a good short-term investment? 💰📈
Stability: A good short-term investment should be stable and not fluctuate too much in value, as many stocks and bonds do. You can count on having your money when you need it, and it’s often protected by FDIC insurance or a government guarantee.
Liquidity: A good short-term investment usually offers high liquidity, meaning you can get to your money fast!
Low transaction costs: Finally a good short-term investment should have low costs, so you don’t have to spend a lot of money just to use it. This way, you can be sure your money is safe and you can use it when you need to, without having to pay a lot for the privilege!
📰 In the news:
Bitcoin hit its highest level since last summer! 👀📈💸
Why it matters
The vulnerability of the traditional banking system was exposed by the sudden collapse of three banks – Silvergate, Silicon Valley Bank (SVB), and Signature Bank. The impact of SVB’s failure reverberated throughout the global banking industry, causing significant turmoil, including the need for Credit Suisse, Switzerland’s second-largest banking institution, to receive a massive $54 billion bailout from the Swiss Central Bank.
Amidst the unfolding banking crisis, investors are seeking out cryptocurrency as a dependable substitute. As concerns mount about a possible worldwide financial catastrophe, the value of BTC/USD has continued to climb.
By the numbers
Bitcoin has still outperformed major stock indexes and commodities this year with a 50% increase. At the start of the year, Bitcoin was trading at just over $16,500 but now it’s hovering around the $28,000 mark.
Inflation and rate hikes from the Fed can straight up affect the value of Bitcoin. Whenever the Fed is indecisive about their interest rates, the dollar index usually drops, ya feel me?
Right now, that dollar index is at 103.86 and might keep dropping, which could be good news for BTC/USD because a falling US dollar often causes Bitcoin’s value to go up.
The big picture
Cryptocurrencies, such as Bitcoin, have emerged as a popular alternative to traditional forms of money. One of the main attractions of these digital currencies is their decentralized nature, which means they are not subject to the control of any central authority, like a government or a bank.
This decentralized aspect makes Bitcoin appealing to those who are wary of relying on financial institutions or governmental bodies for their financial security. Transactions made with Bitcoin are also irreversible, providing an additional layer of security and transparency.
In conclusion, while the decentralized nature of Bitcoin makes it an attractive option for many individuals seeking financial autonomy, it is important to approach any investment in cryptocurrencies with caution and a thorough understanding of the risks involved.
Taylor’s Toolkit:
Now that you are filled in on some of the best short-term investment options, I wanna share some priceless tips I use when I’m trying to make some extra cash. These tips are sure to help you level up your cash game!
Investing your money for the short-term (3 years or less) requires a different approach than long-term investments.
Here are some tips to remember before investing:
- Set your expectations: Short-term investments generally have lower potential returns than long-term ones, so keep that in mind when setting your goals.
- Focus on safety: When investing for the short-term, safety is more important than return. You need to be sure your money is there when you need it.
- Pick an investment that suits your needs: You might be able to earn more with a CD, but what if you need to access the money before it matures? Make sure the investment type suits your needs.
- Understand the risks: Bank products are FDIC-insured, so you won’t lose your principal as long as you stay within FDIC limits. But other short-term investments, like bond funds, could decline over short periods. Make sure you understand the risks involved.
Hope these tips help you make informed decisions about your short-term investments in the future 🚀💰
That’s it for this week!
This week we talked about short and long-term investing, and let me tell you, there’s a lot to consider if you wanna grow that cash. We looked at all kinds of options and talked about the perks of each.
Of course, investing ain’t no joke – there’s always some risk involved. But if you follow these tips we covered, you can make sure your investment is both safe and smart. Thanks for reading along!
Stay Priceless and see ya next week peeps! 💜
