Short term investments for one offer better liquidity owing to the shorter lock in periods than long term ones. This flexibility is one of the primary factors that attract investors. The returns on these kind of investments are usually substantial and tangible. Every investor would like to be able to see the growth of their investments and short term investments give them exactly this. Interestingly, most people are well-informed about long term investments but are not very aware of short term investments. Let’s take a quick look at some aspects of this investment.
When should you opt for a short term investment?
Flexible timeline: A short term investment makes the most sense when you aren’t working on growing your funds in a stringent period of time. Say that you want to grow your money in one or two years but don’t mind even if it stretches to three years. The most prudent of investors park their funds in short term investments for short term goals such as making enough money to go on a vacation or to pay their child’s education expenses
Enough savings: It is vital to have enough savings, apart from a reasonable sized emergency fund. Opt for short term investments only after you ensure that your savings will help you tide over in case things go south.
How should I go about it?
Before you decide to invest, there are a set of questions every investor should ask themselves:
What are your financial goals?
How much money can I invest to achieve the goal?
How soon do I need the money back?
Is my timeline flexible?
What if any of my investments fail?
The key to a healthy investment portfolio is diversity; it is important to have short-term investments within a well-diversified, long-term investment plan.
People generally perceive short term investments as high risk, low yield investments and hence, stay away from them. But this is no longer the case. Nowadays, there are several alternative investment routes that investors can explore. These offer higher returns on investments. KredX is one such platform where one can grow their money in 15-90 days with high returns while being a low risk investment. We are India’s first Invoice Discounting Marketplace that puts businesses who are in need of funds in contact with investors looking to grow their money by using invoices as pseudo-collateral. Investors get lucrative returns on funds that were sitting idle in a short time at a much higher rate than what banks offer for traditional investments while businesses ensure a healthy cash flow.
As is the case with any investment, the investor should always exercise caution before making a decision to invest in a particular instrument. It is important to make well-informed decision and invest only in credible investment routes. Remember that a marginally higher return at a higher risk might not always be worth it!
Next, Read 5 Things every Investor should know about Invoice Discounting before venturing in it.