Top 4 investments for those with short term goals

Today we are going to talk about some options of investments for those with short term goals. These are really good options for people who want to buy a house, go on their dream vacation, or even do a major purchase that you have in mind.

Unlike long-term investments, where the focus is on maximizing growth over an extended period, short-term investments require a different approach that prioritizes capital preservation and liquidity.

Understanding these options will empower you to make informed decisions and effectively grow your wealth while working towards your immediate financial aspirations.

How to establish a short term goal?

Before knowing more about the options, we need to know how to set a short term goal.

Depending on the type of investment you can have a bigger return when talking about money, but if you don’t know where to put this money, there’s no smart use to it.

Establishing a short-term goal involves several key steps to ensure clarity, feasibility, and effectiveness in achieving your desired outcome.

Start by clearly defining what you want to achieve in the short term. Your goal should be specific, measurable, achievable, relevant, and time-bound, for this last one you can use the method SMART.

Assess what resources you’ll need to achieve your goal. This could include financial resources, such as savings or investment capital, as well as non-financial resources like time, skills, or support from others.

Discover the top 4 investments for those with short term goals

Since you already know how to set your short objectives, you will discover four of the top investments for those with short term goals. 

These types of investments usually need some planning, because the liquidity is the most important, but time is running out towards your goals.

Now, let’s see some of the investments for those with short term goals:

1 – High yield savings accounts

High yield savings accounts are a popular choice of investments to short term goals due to their safety and liquidity. These are considered good options because they typically offer higher interest rates when compared to traditional savings accounts.

2 – Money market accounts

Money market funds invest in short-term, high-quality debt securities such as Treasury bills, commercial paper, and certificates of deposit. These funds aim to preserve capital and provide liquidity while generating modest returns.

They are a little similar to the high yield savings accounts, and usually offer higher interest rates and FDIC insurance, Federal Deposit Insurance Corporation.

3 – Certificates of Deposit – CDs

The short term certificates of deposits, or just CDs, are also a popular type of investments for those with short term goals. This investment locks your money into a fixed term, in exchange for a guaranteed interest rate.

They are basically time deposits offered by banks and credit unions with fixed terms ranging from a few months to several years.

It’s offered higher interest rates than regular savings accounts, but your money is locked in for the duration of the CD term, so you can’t move this money.

If you have a really specific time frame to your short term goal, the CDs will be the more suitable option in this case.

4 – Short term bond funds

To our last type of investments for those with short term goals, we can talk about mutual funds.

Short-term bond funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of bonds with relatively short maturities, typically ranging from one to five years.

These funds provide investors with exposure to a variety of fixed-income securities, including government bonds, corporate bonds, and municipal bonds, among others.

Consequently, short-term bond funds present a balanced option for investors aiming for modest risk and increased yields to meet their short-term financial objectives.

When choosing the right type of investment to allocate your resources into, you need to understand all their characteristics and also their risks, to this last one you could search for your investor profile.

Additionally, consider consulting with a financial advisor to tailor your investment strategy based on your specific financial situation and objectives.

Start planning and understanding more about the investments for those with short term goals today!