I have a large sum of money, I want to invest it where I can make the highest return possible, I don’t want to lose any of my principal, and I want access to my principal whenever I need it.
Hello everyone, this is Adventago here, and I hear on personal finance forums this question all the time.
These are investors who want to make a lot of interest, but, don’t want to take on any risk whatsoever, and, in this low-interest-rate environment that’s pretty much unheard of.
CD rates are at an all-time low, and, mortgage rates are at an all-time low, so trying to make the most amount of money in the short term is very hard.
However, I still want to show you today some of the best places you can invest your money in, for the short term.
1. Pay Off Your Debt
I hear so many people that have credit card debt, consumer loans, student loans, and many others.
And these things are paying high interest rates, yet they want to take their money and invest it for the short term.
If you’re only going to get 2, 3, Or 4% in the short term, and you’re paying 8, 9, 10, or 12% on credit card debt, or, any other type of consumer debt, then what’s the point of investing?
If you’re trying to make money in the short term pay off that debt, by paying off that debt you’re going to make a return by whatever the state of the interest rate is.
2. Ditching Your Local Brick And Mortar Bank Or Credit Union
If you’re comfortable with going online, you can open up online savings accounts, online checking accounts, and online money market accounts.
Also, companies like Ally, I. N. G, Radius Bank, HSBC Direct, and Bank5 Connect, all offer fairly attractive interest rates, especially compared to what your local bank is offering.
Not to mention the fact that the online banks don’t charge you certain transaction costs that sometimes you see with your brick and mortar, and, some of your bigger financial institutions.
It’s amazing how much technology has developed nowadays, to where a lot of your online banks offer some of the same services that your brick and mortar, or, your local financial institutions are offering.
It’s coming to the point where you won’t even need them anymore, and that’s depositing checks, ATM withdrawals, transferring money, and everything else.
3. Buying A CD
Now, you can choose your mortar location, but I also encourage you to shop online, banks like Ally are very competitive with their CD rates.
If CDs aren’t paying enough for what you’re looking for, another option could be, (However there is a bit more risk to this), trying to find short-term bonds, and, even municipal bonds.
Now, you can buy the actual individual bond themselves, which is a little hard to come by, but, you can also find mutual funds or ETF’s that have short-term bonds inside them.
Now, when I mean short term, typically you’re looking for bonds with a maturity between 3 and 5 years, you don’t want anything longer than 5 years.
There’s this inverse relationship with interest rates and bond prices, it’s a little bit complicated, but you could lose your principal, when interest rates go up, so you want to make sure that you’re choosing the shortest term possible.
4. Peer 2 Peer Lending (P2P)
Peer 2 Peer companies such as Lending Club, Prosper, Upstart, Kiva, and, Funding Circle, offer a very unique way to basically become a banker.
Now, you’re loaning money out, and you’re getting paid the interest rate that a bank would get, when they make a loan to you, if you were to apply for a home, or a car loan.
And last but not least, one of the best places you can park your money for the short term is…
5. Opening A Roth IRA
Now, I know what you’re going to say “But Adventago, the Roth IRA is not an investment!” And you’re right, it’s not, but by putting money into a Roth IRA, at least you’re ensuring that you have money saved for retirement.
Now, if you think you need it for the short term, I wouldn’t invest in the stock market or individual stocks, keep it in something liquid, and, safe.
But, if you recall with the rules of the Roth IRA you have access to your contributions at any time, so if you put money into it and you need it you can always pull it out.
Obviously, you want to make sure you’re investing it conservatively, you don’t want it in the stock market in this scenario, because if you need it, you can pull out, if you don’t you’ve got money to save for retirement.
That’s my recap for What Are The Best Places To Invest Your Money For The Short Term That You Might Not Know About…?
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