I get emails from people frequently asking what they should do with the money they’ve saved up for the short term. Due to the stock market’s recent volatility or those saving up for the down payment for an investment property, more people are investing money in their investment portfolios than before.
It’s the same also for younger investors. Young investors hold more cash than ever in their investment portfolios instead of putting the money into the market for stocks.
What is the best place to keep your cash in the short term? There are a variety of short-term cash investments you might think about.
The High Yield Savings Online Accounts
There are numerous choices for investors looking to obtain more attractive interest rates on their savings online. Online banks, a majority of them accessible online, such as ING Direct, offer customers more excellent rates of return since their overhead costs are less.
Other excellent online banks that provide an incredible rate of return include The ING Direct’s Orange Savings Account, Ally Bank, Everbank, and PerkStreet Financial. The savings are transferred to the customers of online banks since these banks don’t require the cost of the physical presence of a storefront.
Certificates of Deposit for Short-Term Term
Short-term deposit certificates offer customers an interest rate better for short-term cash investment than traditional savings accounts for several years. Like all certificates of deposit, you can choose various months or years to pick from when you deposit with the certificates deposit.
You can pick investment durations as short as three months, six, nine, or 12 months. You can also select CDs with ten years or more until their maturity. One of the things you need to look for when purchasing CDs CD as short-term cash investments is the ability to quickly end your CD contract and withdraw your money before the maturity date.
A lot of certificates of deposit allow you to make this choice, and you only lose some months’ worth of interest as a rule. This makes these warranties among the top investment options for cash in the short term that you can select from.
Money Market Funds
Funds for money market and market accounts are similar to their savings accounts, little brothers. They also can increase the number of returns compared to traditional savings accounts, with no additional risk for you to take.
The investments are not tied to a price of one dollar per share. They have covered with the Federal administration’s Federal Deposit Insurance Corporation (FDIC) insurance coverage for all of the top, most prominent, and most well-known banks. There’s no reason not to put your money into any bank, whether online or bricks and mortar, that isn’t covered under FDIC insurance.
Credit unions offer the same protection for depositors, provided by their National Credit Union Administration (NCUA). The federal credit unions have been chartered, supervised, and insured through the National Credit Union Administration (NCUA), one of the US government agencies, much similar to what the FDIC provides for banks.
There are numerous options for cash investments, rather than leaving your cash in the brick and mortar bank’s savings account, earning a quarter percent return if you’re fortunate enough to make the amount. Funds for the market, high-yielding savings accounts online, such as the ones offered through ING Direct and other online banks, and certificates of deposit offer higher returns.
The investments made by reputable online banks are protected by FDIC insurance, just like the savings account you have at your local bank branch, and you will have quick access to your funds. There’s no reason to achieve a nearly zero percent return if you can increase the rate of return by investing in other short-term cash investments.
