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Short Term Investment options
1. Checking Accounts. You may not think of a checking account as an investment but it is in fact one type of short term investment.Checking accounts are designed for ease of withdrawal and deposit so they will pay almost no interest.They are however an option for short term investing because it is a place to store your money.They extremely convenient for writing and depositing checks, accessing quick cash if needed from ATM machines, and arranging to make other types of payments using bill pay.They can come in very handy for a business if you are simply looking for a place to keep your cash and make very little interest off of.
2. Savings Accounts.Another short term investment option is a savings account.A savings account can provide a higher return than a checking account, but not a whole lot more.Savings accounts are generally a good place to keep the money you want to save, but are not concerned with making a lot of money in return.They are often used with checking accounts to handle personal finances.So if you are a small business just starting out, then a savings account might be a good way to start.Most banks require a minimum deposit and monthly balance so make sure you check into all that before opening your savings account. 3. Money Market Funds. Money market funds are a type of mutual fund that invests in short term (less than a year) debt securities.They are fixed at $1 per share and only the yield fluctuates.There is a particular fund that money market funds offer; 100-plus money market funds.They are available to investors and can provide many advantages that checking and savings accounts do not offer.Money market funds are extremely liquid; you can take money out of them on short notice if need be and there is no penalty for it.They are also low risk because the government has the ability to raise taxes to meet is obligations.It is almost impossible to lose your principle money you invest and most companies carry insurance to cover your assets. 5. Certificates of Deposit. Also known as CD's, certificates of deposit offer higher rates.Investors searching for a relatively low risk investment option might lean more towards this type of short term investment because it can easily be converted into cash.The way they work:When you purchase a CD, you invest a certain amount of money for a certain amount of time.The time period is usually somewhere from six months, to five years (depending on your needs).When you redeem your CD before it matures you pay an early withdrawal penalty and give up a portion of what you have earned.If you don't take it out before it matures then you get it all. When it comes to short term investment options you can see that there are many to choose from.These are only a few of the options available to you.Make sure you do all your homework and know exactly what your needs are so that you choose the best investment for your business.
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