• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

The Savvy Couple

Fast Track Your Financial Freedom

  • Make Money
    • Side Hustles
    • Work From Home
    • Small Businesses
    • Blogging
  • Investing
  • Save Money
  • Money Management
  • SHOP
  • Show Search
Hide Search

Home » Investing

11 Best Short-Term Investments With High ROI In 2023

Kelan Kline | Updated December 19, 2022 Investing

Are you interested in investing but don't want your money tied up for the long-term? It's time for you to learn about short-term investments and how they can help your portfolio grow.
best short-term investments Go Long or Go Short Stock Market Buy Sell Term Holding 3d Illustration
This article may contain links from our partners. Please read how we make money for more info.

Short-term investments are exactly that- short! You can invest now and not wait forever for a return on your cash.

But what are the best short-term investments and what returns may come your way?

We’ve compiled a list of short-term investment options for everyone, from high-yield savings accounts to short-term bonds.

Whether you want to start investing to make some extra money quickly or seeking a more secure investment option, we’ve got something for everyone on our list.

Best Online Banking Alternative
Chime
Chime

A bank account should not cost you money. Chime has your back with no monthly fees so you can build credit and more.

Start Saving Now

Table of Contents

  • Quick Picks For Short-Term Investments
  • Are Short-Term Investments?
  • 11 Best Short-Term Investments
    • 1. High Yield Savings Accounts (HYSA)
    • 2. Cash Management Accounts
    • 3. Treasury Bonds
    • 4. Money Market Accounts
    • 5. Money Market Mutual Funds
    • 6. Short-Term Corporate Bonds
    • 7. Short-Term Government Bond Funds
    • 8. Certificates Of Deposit
    • 9. No-Penalty Certificates Of Deposit
    • 10. Online Savings Accounts
    • 11. Peer-To-Peer Loans
  • FAQs: Short-Term Investments
    • What is the difference between short-term and long-term investments?
    • What investment is best for a year or less?
    • What investments need over a year?
    • What makes for suitable short investments?
    • What investments do better over time?
  • Final Thoughts

Quick Picks For Short-Term Investments

You’ve got to research before investing because there are many types of short-term investments. You want to find the best option for you to get the best ROI. 

But we get that you’re busy and want some of our top picks so you can get a move on!

Here are a few short-term investments you may want to put on the top of your list if you want secure, lower risk options in your portfolio:

  • Higher Interest Rates On Money: High-Yield Savings Accounts 
  • Money-Back In 1 Year: Corporate Bonds
  • Easy Fixed Interest: Certificate Of Deposits

Are Short-Term Investments?

money and time balance scales

Short-term investments are a great way to grow your money. They are generally considered to be any investments made for three years or less.

There are many different types of short-term investments, from high-yield savings to money market accounts to short-term bonds. Each has its own set of benefits and risks, so it’s important to choose the right one for your needs.

The best short-term investments will offer you:

  • A higher interest rate than a regular savings account
  • Low fees
  • Easy access to your money

They also tend to be less risky than other types of investments, making them a good option for those who are new to investing or looking for a more secure investment.

11 Best Short-Term Investments

1. High Yield Savings Accounts (HYSA)

Potential Return (ROI): 0.90% at CIT Bank

A high yield savings account is a type of savings account that offers a higher than the average interest rate. HYSAs can be a great way to grow your savings, especially if you have a large amount of money in your savings account.

Online banks typically offer high yield savings accounts, like CIT Bank, but you can invest in a bank or credit union.

The FDIC insures them for banks and National Credit Union Administration for credit unions, which often have lower overhead costs than traditional banks. This allows them to offer higher interest rates to their customers. 

Many high yield savings accounts also offer other benefits, such as no fees and no minimum balance requirements. However, it is essential to compare different accounts before deciding which one is right for you.

Pros

  • FDIC insurance: unlikely to lose money
  • Higher interest rate than traditional saving accounts
  • Low risk compared to stock funds

Cons

  • Low interest compared to any other short-term investment

2. Cash Management Accounts

Potential Return (ROI): 0.25% – 1%

Cash Management Accounts (CMAs) are a good option if you want to earn more interest than what a traditional financial institution offers. They are also an excellent way to access your money quickly, as you can write checks or use an ATM card to withdraw cash.

Robo-advisors generally provide cash management accounts. These brokerage firms often invest your money into safe low-yield money market funds or exchange-traded funds (EFTs).

Plus, some Robo-advisors offer free stocks when you sign up and have more to offer than just a cash management account!

Pros

  • Earns more interest than with a traditional savings account
  • Can write checks or use an ATM card to withdraw cash like a traditional checking account
  • Less risky because the money is invested in low-yield money market funds

Cons

  • May have fees associated with the account

3. Treasury Bonds

US treasury

Potential Return (ROI): 2.08%

Treasury bonds (T-Bonds) are among the best investments for investors looking for stability and security with government bonds. They are issued by the U.S. government and backed by the full faith and credit of the U.S. Federal government.

T-bonds have a fixed interest rate and maturity date. These government bonds are typically issued with maturities between 10 and 30 years.

They offer a low-risk investment with the potential for modest returns. The Treasury bond is highly liquid and can be easily bought and sold in the secondary market.

Pros

  • T-bonds pay a fixed rate of interest every six months until maturity

Cons

  • Interest rate risk: as the interest rates rise, the value will decline

4. Money Market Accounts

Potential Return (ROI): 0.70%

A money market account is a savings account with a higher interest rate and lower minimum deposits than a regular Certificate of Deposit.

Money market accounts usually have monthly withdrawal limits and require a minimum deposit, though some impose withdrawal restrictions each month.

They are not as liquid as a savings or bank account, which means money market accounts aren’t ideal for quickly moving money around. However, a money market account is much more flexible and liquid than investing money in a CD.

Pros

  • Higher interest rates than a traditional savings account
  • There is usually low risk with money market accounts

Cons

  • Withdrawals can be restricted
  • Money can’t be moved around quickly

5. Money Market Mutual Funds

Potential Return (ROI): 0.70%

A money market mutual fund invests in highly liquid securities with a low risk of losing money. This type of fund is designed to provide investors with a safe, stable way to earn a return on their investment.

The Securities and Exchange Commission (SEC) regulates these funds. The funds are subject to certain restrictions, such as the types of investments they can make.

Money market mutual funds typically invest money in short-term debt instruments, such as T-bills, municipal and corporate debt, and bank debt securities. They’re considered very safe, as they are backed by the full faith and credit of the issuing government or company.

However, because these funds invest in relatively lower-risk securities, they also provide relatively low returns. For this reason, they are often used as a place to park money that is not needed in the short term and get a little ROI.

Pros

  • Can be cashed out quickly
  • Typically have a higher interest rate than savings accounts and C.D.s

Cons

  • Not as safe as a typical MMAs backed by the FDIC.

6. Short-Term Corporate Bonds

Potential Return (ROI): 1% – 2%

Short-term corporate bonds are a type of debt security issued by a corporation.

They’re considered one of the riskier investments because the full faith and credit of the U.S. government doesn’t back them.

Short-term corporate bonds typically have a term of one year, but they can also be issued with terms of up to five years and are a good option for investors looking for a higher yield than T-bonds.

Pros

  • Higher yield than a Treasury bond
  • Can be issued with terms of up to five years

Cons

  • Riskier than Treasury bonds

7. Short-Term Government Bond Funds

government bonds Word writing text Government Bonds. Business photo showcasing debt security issued by a government to support spending

Potential Return (ROI): 1% – 2%

Short-term government bond funds are investments that pool money from investors and invest it into short-term government debt securities, such as Treasury bills (T-bills) and commercial paper.

They are a good option for investors who want to invest their money in safe, stable short-term bond funds. Short-term government bond funds offer a higher yield than a traditional savings account, but they are still at lower risk.

Pros

  • Backed by the U.S. government
  • Higher yield than a traditional savings account
  • Little or no risk

Cons

  • Lower rate of return

8. Certificates Of Deposit

Potential Return (ROI): 2%

A certificate of deposit, or CD, is a saving account that offers a fixed interest rate for a set period.

C.D.s are often used as short-term investment accounts and typically have a maturity date of between three months and five years. When a CD reaches its maturity date, the investor can choose to cash it in or renew it for an additional term.

C.D.s are a relatively safe investment since the Federal Deposit Insurance Corporation insures them (FDIC) up to $250,000 per account. However, they offer lower rates than other types of investments, such as stock mutual funds.

As a result, C.D.s may be a good choice for investors looking for stability and low risk.

Pros

  • The majority of CD accounts are covered by FDIC insurance, making them highly secure
  • Higher interest rate than a traditional saving account
  • Maturity can be quick

Cons

  • Low liquidity- money is in the CD until terms are up
  • Sometimes considered low-return, not enough ROI
  • Longer C.D.s will provide more ROI
  • No multiple deposits

9. No-Penalty Certificates Of Deposit

Potential Return (ROI): 0.35% – 0.75%

A no-penalty certificate of deposit is a saving account that allows withdrawals without penalty. This makes it a good option for short-term savings since you can access your money if needed.

However, the trade-off is that no-penalty C.D.s typically have lower interest rates than traditional C.D.s.

A no-penalty CD could be a good option if you’re looking for a short-term investment with relatively little risk.

Pros

  • Insured by the FDIC
  • Can end the CD early without penalty

Cons

  • No multiple deposits allowed
  • Can’t take partial withdrawals
  • regular C.D.s could have higher return rates

10. Online Savings Accounts

Potential Return (ROI): 0.40% – 1.0%

One investing option that has become increasingly popular in recent years is an online savings account. Online savings accounts offer several advantages over traditional savings accounts, making them attractive for short-term investors.

One major advantage is that online savings accounts, like those offered at Chime, typically offer higher interest rates than traditional ones. This means that you can earn more money on your investment.

Online savings accounts are often FDIC-insured, meaning that your money is protected in the event of a bank failure. Finally, many online banks offer features such as mobile check deposits and budgeting tools to help you manage your finances in one place.

Read our Chime Review to find out how you can get 1.00% APY on your savings, open a credit builder account, and more!

Pros

  • Quick access to cash
  • Higher interest rates than traditional savings accounts
  • Low transaction costs

Cons

  • Higher minimum balance requirements

11. Peer-To-Peer Loans

borrowing money

Potential Return (ROI): 5.5%

Peer-to-peer loans are made between individuals rather than between a borrower and a financial institution.

Peer-to-peer loans are typically made through online platforms that match borrowers with lenders. These platforms allow borrowers to request loans from multiple lenders, allowing lenders to select which loans they would like to fund.

Because P2P loans are not backed by collateral, they tend to have more interest than traditional loans. However, P2P loans also come with higher risks. Investors may not recoup their initial investment if borrowers default on their loans.

Pros

  • Offers higher return than other investments
  • Can choose which borrower to lend to based on the profile
  • Contingency funds are available on some sites in case of loan default

Cons

  • Riskier because loans are often unsecured
  • ROI may be lowered if the borrower pays back the loan early
  • To get money back early, you will have to find another P2P lender to take the loan

FAQs: Short-Term Investments

What is the difference between short-term and long-term investments?

Short-term investing is holding assets for one year or less and is less risky, such as a cash management account or high yield savings account.

A long-term investment usually lasts more than one year and has more risks, like some stocks in the stock market, real estate, art investments, and other options.

What investment is best for a year or less?

clock time money

Various investment options are available for those looking to invest for a year or less.

Some popular options include:

  • Savings accounts are a low-risk option that offers liquidity and flexibility. Money can be withdrawn without penalty, making it a good option for short-term needs. However, the interest rates on savings accounts are relatively low, so the return potential is limited.
  • A certificate of deposit (CD) is a savings account that offers a higher interest rate for a longer-term commitment. C.D.s typically have terms of six months to five years. Early withdrawal may be subject to penalties.

What investments need over a year?

Long-term investments are riskier than short-term investments, offering higher returns but also need more time to get ROI.

If you don’t need money right away and have a higher risk tolerance, there are a few long-term investments you can get in on:

  • Stock market: Investing in the stock market offers the potential for high returns, but it also comes with a higher level of risk. Before investing in the stock market, investors should consider their goals and risk tolerance.
  • Bonds: Bonds are a type of debt investment in which an investor loans money to a government or corporation in exchange for interest payments. Bonds typically have a longer term than CDs, ranging from five to 30 years.
  • Mutual funds: A mutual fund is an investment that pools money from many investors and invests it in various assets, such as stocks, bonds, and cash. Mutual funds offer professional management and diversification, which can help to reduce risk.

What makes for suitable short investments?

Short-term investing is attractive because of the potential for high returns in a relatively short period.

What makes an excellent short investment? What should you look for in a short-term investment? There are several factors to consider.

  • Liquidity
  • Safety/low risk
  • Return potential
  • Flexibility
  • Tax implications
  • Expenses

What investments do better over time?

There is no one-size-fits-all answer to this question, as the best long-term investments for a given individual will depend on their goals, risk tolerance, and other factors.

However, some investments tend to perform better than others over the long term. For example, stocks have historically outperformed bonds and other fixed-income investments.

Final Thoughts

how to rollover 401(k) man putting money into a piggy bank, rows of coins and a clock

So whether you’re looking for a way to make some extra cash or grow your savings account, these are the best short-term investment options to make money without taking too much risk.

If chosen wisely, they can be an excellent stream of passive income if you find the option that aligns best with your goals.

Though short-term investments may seem less risky, you need to know that any investments come with risks, whether you pick savings bonds or decide to go for long-term investments in the stock market.

By doing your homework and understanding the different types of short-term investments available, you can make smart choices about where to put your money and increase your chances of seeing a return on your investment.

0 shares
  • Facebook
  • Twitter

Related Articles You Might Like

  • 21 Best Ways To Invest $10,000 In 2023 & Build Wealth

    21 Best Ways To Invest $10,000 In 2023 & Build Wealth

  • Digital Real Estate Explained & How To Invest Wisely In 2023

    Digital Real Estate Explained & How To Invest Wisely In 2023

  • Robinhood Review 2023: The Most Popular Stock Trading App

    Robinhood Review 2023: The Most Popular Stock Trading App

  • Should You Pay Off Mortgage Or Invest Money in 2023

    Should You Pay Off Mortgage Or Invest Money in 2023

  • Stash Vs. Acorns 2023: Which Is Better To Invest Change

    Stash Vs. Acorns 2023: Which Is Better To Invest Change

  • 32 Passive Income Ideas That Will Build You Real Wealth

    32 Passive Income Ideas That Will Build You Real Wealth

About Kelan Kline

Hi, I'm Kelan Kline! A personal finance expert, entrepreneur, and passionate money nerd. With my bachelor's degree in business and finance, my drive in life is to help others learn how to make money online, create passive streams of income, and reach financial freedom! I have been featured in online publications like Forbes, TIME, USA Today, Huffington Post, Business Insider, Marie Claire, CNBC, Acorns, The Penny Hoarder, Bankrate, Nerd Wallet, Yahoo Finance, MSN, GoBankingRates, Her Money, Thrive Global, The Simple Dollar, Money Crashers, Readers Digest, FinCon, Best Company, Rent Cafe, Romper, Intuit Turbo, Opp Loans, CreditCards.com, Debt.com, Discover, LifeLock, Quick Sprout, Money Geek and many more! Click here to read all of my posts.

Primary Sidebar

Footer

Connect with us!

  • Email
  • Facebook
  • Instagram
  • Pinterest
  • TikTok
  • Twitter
  • YouTube
  • About Us
  • Our Team
  • Contact Us

As Featured On

Navigate

  • Advertise
  • Editorial Guidelines
  • Press
  • Privacy Policy
  • Terms and Conditions
  • Disclaimer

© 2023 The Savvy Couple. All rights reserved. Please see our disclaimer.