12 Best Short-Term Investments in 2023 (2023)

12 Best Short-Term Investments in 2023 (1)

Donny Gamble

I'm Donny. I'm a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.

12 Best Short-Term Investments in 2023 (2)

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When it comes to saving money, conventional wisdom says that placing your money in a federally insured bank is the best of action. These investments are safe, reliable, and accessible.

Increasingly, however, people are beginning to realize that keeping money to just sit in a bank isn’t necessarily the smartest financial move - short term investing may be.

For those interested in short term investing, here are the 12 best short-term investments:

  1. High yield savings account
  2. Money market account
  3. Cash management account
  4. Short term corporate bond funds
  5. Savings bonds
  6. Money market funds
  7. Certificates of deposit
  8. Treasury bills
  9. Dividend paying stocks
  10. Preferred stocks
  11. Fixed annuities
  12. Peer-to-Peer Loans

Finding which short term investments can be a challenging process. Read on to learn about what technically qualifies as a short term investment, and why these 12 are the best short term investments around.

1. High Yield Savings Account

High yield savings accounts are often considered a great form of investment alternative to a checking or low yield savings account. Imagine that if the entirety of your life savings were simply put in a box in the back corner of your closet.

This, metaphorically speaking, is the same thing you’re doing when you place all of your money into a checking account. Though not cold hard cash, a checking account is doing nothing to prevent dust from settling on that money.

Savings accounts, alternatively, allow you to do something with that money. When you place your funds into a savings account, the bank uses it to create loans, and you receive a small amount of interest on your return.

By keeping your money in a high yield savings account, you’re ensuring that you make a greater amount of interest on your investment than you would with a savings or checking account.

Those who keep their money in a savings account, however, do run the risk of having less purchasing power than when they invested their money due to inflation.

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(Video) 8 best short term investments 2023

2. Money Market Account

A money market account, similar to a savings account, is another kind of bank deposit in which you place your money in the specified account, and you incur interest on the money in that account.

These accounts, additionally, often qualify for federal insurance by the Federal Deposit Insurance Corporation, also known as the FDIC, making it so that it’s a generally safe investment.

Unlike most savings and checking accounts, however, money market accounts often require a higher minimum initial investment. Additionally, money market accounts face a similar risk in that their purchasing power is likely to decrease over time, as they often have a hard time keeping up with inflation, even if inflation is only at approximately 3%.

When opening a money market account, be sure to check both banks and credit unions for the best opportunities.

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(Video) The Best Short Term Investments - Where To Hold Cash 2023

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3. Cash Management Account

Cash management accounts, also known as CMAs, are another type of banking account, similar to that of a checking and savings account. Cash management accounts combine checking accounts, savings accounts, and investment accounts, putting them all within one product.

This makes it incredibly helpful for the modern banker as it reduces the number of accounts people need to navigate.

Cash management accounts also serve as a great form of investment because, similar to that of a money market account, the interest rates of cash management accounts are typically much higher than the average savings account.

Cash management accounts often produce a return of about 0.5% per year, a small amount, but significantly higher than the 0.06% return most savings accounts produce.

Cash management accounts do face the downside, however, of often having subpar customer service. When banking, it’s incredibly important the banks are accountable to the investors.

Cash management accounts often don’t offer face-to-face customer service.

4. Short Term Corporate Bond Funds

Often, people consider bonds a safe alternative to stocks. While often bonds are secured by the government and are thus considered government bonds, there are some bonds available on the market that are corporate bonds.

These are, like government bonds, an investment of a certain amount in a company that gathers interest. Once the bond matures, the corporation pays the initial investment back.

For example, if a company were to sell a bond for $10,000 to an individual that matures in five years, the company would, over those five years, pay the investor interest on the investment.

After five years, the bond would mature, the individual would no longer receive interest on the investment, and the initial $10,000 would be returned. This bond, because it matured within five years, would be considered a short term corporate bond.

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5. Savings Bonds

Savings bonds operate in the same way as corporate bonds, with the exception that these are government-backed, not corporate-backed, and are thus backed by the “full faith and credit of the United States”.

This means that investors don’t need to be concerned that the investment won’t be paid back, because this would entail the United States defaulting on its debt, or the federal government collapsing.

Though not necessarily impossible, this is highly unlikely. Savings bonds, though coming with nearly no risk, also come with very little return. This means, just like savings accounts, that while the number of dollars may not be less after a short time period, the purchasing power may be less due to inflation.

Fortunately, government bonds are one of the most traded assets and are thus highly liquid.

6. Money Market Funds

Money Market Funds are another great form of short term investment. Not to be confused with a money market account, a money market fund is similar to that of a stock portfolio.

Money market funds invest in a number of short term, highly liquid assets to encourage diversity and thus decrease risk. These assets may include certificates of deposit (CDs), short term bonds, and several other short term investments.

These are very different from money market accounts. Money market accounts, as previously mentioned, are insured by the FDIC and are a separate asset.

Money market funds are investments themselves offered by investment companies. There’s no guarantee of principle, or even of return on the investment.

Money market funds do have the benefit, unlike some other short term investments, of allowing people to withdraw funds from them without any penalties.

7. Certificates of Deposit

Perhaps the most well-known type of short term investment, certificates of deposit, also referred to as CDs, are one of, if not the safest form of investment. CDs are what are called time deposits.

What this means is that you’re allowing a bank to hold onto a set amount of money for a contractually agreed amount of time. Banks look favorably upon CDs because it forces those who hold them to continue to do business with that bank.

In response, to make it beneficial to customers, CDs have an interest rate associated with them, so that those who engage in these contracts can incur a return. This makes CDs a great form of true savings.

CDs, however, do have the downside in which investors face a monetary penalty for withdrawing money from the account prior to the agreed date. This means that, if you were to run into an emergency and need money, you’d face a penalty for withdrawing funds.

8. Treasury Bills

In many ways, Treasuries are similar to US saving bonds. The US Department of Treasury offers a number of investments in the form of debt obligations.

These, just like US saving bonds, are when someone invests a certain amount that is returned after the treasury matures, collecting interest on the investment the entire time prior to it maturing.

While most US saving bonds are sold in $10,000 denominations, Treasurys are sold in denominations of $1,000. The biggest difference between Treasuries and saving bonds is the time in which the investment returns.

While most bonds take twenty to thirty years to mature, Treasuries mature at different rates depending on what they are. Treasury bills mature in a year or less, Treasury notes mature in about ten years, and Treasury Inflation-Protected Securities, known as TIPS, go up and down depending on inflation.

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9. Dividend Paying Stocks

Dividend Paying Stocks offer a unique and profitable way to invest in the short term.

Dividend paying stocks are when companies distribute some of their earnings to shareholders, allowing investors to incur a return on their investment from both the changes in the stock's price, as well as paying commensurate to how the company is doing.

This is phenomenal for short term investors as it allows an additional way to make money off of their investment. Dividend paying stocks aren’t without potential downsides, however. If a company were to have bad earnings consistently, it may be forced to eliminate the dividend.

While it’s true that the value of the stock would decrease regardless of the presence of the dividend if the company was doing poorly, if the dividend was eliminated, this would drive prices down even further, causing a major loss for the investor.

10. Preferred Stocks

Preferred stocks serve as a metaphoric combination of a bond and a stock. Preferred stocks work similarly to dividend paying stocks, in the fact that companies reward shareholders with a portion of the earnings.

However, while dividend stocks often simply reinvest that dividend into additional stock holdings, preferred stocks pay out the dividend in cash.

Preferred stocks are also somewhat different from other dividend paying stocks in the fact that preferred stocks are required to receive the dividend before other common stocks.

In other words, preferred stocks are simply a more secure form of a dividend paying stock.

11. Fixed Annuities

Fixed annuities, unlike the previously mentioned investments, don’t incur any sort of return. Rather, a fixed annuity is simply a way of ensuring that you are continuing to receive payment over a certain amount of time.

Fixed annuities work by paying a certain amount upfront to a company that’ll distribute that money back to you over a certain period of time. This makes it very beneficial for those whose income may be inconsistent.

Fixed annuities have the downside of being highly illiquid, however. This means that, once the contract is agreed to, it’s incredibly difficult, if not impossible, to get out of.

Additionally, if inflation were to rise significantly during the time in which an investor is part of a fixed annuity, then the purchasing power of the investment would be greatly decreased.

Though you’ll incur the principal investment, its actual value will be decreased.

12. Peer-to-Peer Loans

Peer-to-Peer loans have, in the past, been criticized for their lack of regulation and the fact that it was a way to circumvent the banking system. Yet, with the rapid development of technology and online investment, Peer-to-Peer lending is slowly making a comeback.

Peer-to-Peer lending, also known as P2P lending, allows individuals to offer their own money as loans to others. Lenders reap the benefit of making a return on their investment in the form of interest, while lendees are able to receive a better rate than what most banks offer.

Peer-to-Peer lending most frequently occurs on websites that facilitate the exchange. Be sure to check out sites such as Prosper, Lending Club, and Peerform when deciding to invest in Peer-to-Peer Loans.

Summary

Most of the time when people discuss investing, people imagine stock portfolios such as a 401(k) or other sorts of long term investments that are held onto for ten, twenty, or even thirty years.

These are often the most substantial investments and are the investments that’ll incur the most return. Sometimes, however, people want to save money, but want it to collect more interest than what a bank can offer.

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In these cases, people turn to short term investments. These are investments that can easily be converted into currency within five years. This allows time for the investor to do an effective job of saving money, but can also incur a return from the investment.

These types of investments are most often used to mitigate risk and act as an alternate form of savings. Important to note is that these investments must be highly liquid, in order to be transformed into hard currency quickly.

FAQs

What should I do with my money in 2023? ›

4 simple things to do with your money now, so you start 2023 off on the right financial footing
  • Build your emergency savings fund. The pandemic has shown us all the importance of having easily accessible savings in the form of a rainy day or emergency fund. ...
  • Make a budget. ...
  • Save more for retirement. ...
  • Review your insurance.
Dec 27, 2022

What is the safest short term investment? ›

High-yield savings accounts, Treasurys and government bonds are safe short-term investments.

Which sector will boom in 2023? ›

Internet and Information Services is one of the best sectors to invest in heading into 2023. The global IT services market grew from $3,471.35 billion in 2021 to $3,938.75 billion in 2022 at a compound annual growth rate of 13.5%. The market is forecasted to reach $5,905.09 billion in 2026 at a CAGR of 10.7%.

Which stock will boom in 2023? ›

Best Stocks to Invest in 2023
S.No.Top Stocks
1.Reliance Industries
2.Tata Consultancy Services
3.HDFC Bank
4.Infosys
1 more row
Jan 11, 2023

Which investment gives highest return in short term? ›

Fixed deposits are easily among the best options for short-term investments. They offer a high rate of return, independence from market fluctuations and interest rate volatility, and high flexibility in terms of tenor period. You can also withdraw your deposit during times of emergency by paying a penalty.

Where can I park my money for 6 months? ›

Where to invest money for the short term?
  • Bank savings accounts. Your savings account or your checking account is a no brainer. ...
  • Bank Fixed Deposits and Other Deposits. ...
  • Short term Debt Funds. ...
  • Arbitrage Funds. ...
  • Money Market Funds. ...
  • Fixed Maturity Plans (FMPs) ...
  • Gold ETFs. ...
  • Post Office Term /TimeDeposits.

Where should I put cash right now? ›

The Best Places to Save Money
  • High Yield Savings Accounts.
  • Certificates of Deposit.
  • Traditional Savings Accounts.
  • Money Market Accounts.
  • Treasury Bills and Bonds.
  • Retirement Savings Accounts.
Nov 8, 2022

What is the safest investment with the highest return? ›

Here are the best low-risk investments in January 2023:
  • High-yield savings accounts.
  • Series I savings bonds.
  • Short-term certificates of deposit.
  • Money market funds.
  • Treasury bills, notes, bonds and TIPS.
  • Corporate bonds.
  • Dividend-paying stocks.
  • Preferred stocks.
Jan 1, 2023

What not to buy during high inflation? ›

While the effects of inflation are not easily avoided, several financial planners tell Fortune that there are steps consumers can take to duck the worst effects.
  • Avoid buying a car if you possibly can. ...
  • Grow investments, rather than savings accounts. ...
  • Think about buying more veggies. ...
  • Spend less, if you can.
Dec 13, 2021

What is the #1 safest investment? ›

U.S. Treasury bonds are widely considered the safest investments on earth. Because the United States government has never defaulted on its debt, investors see U.S. Treasuries as highly secure investment vehicles.

Where should I invest before I crash? ›

  • Where to Invest Your Money BEFORE the Market Crashes. The stock market is unpredictable and volatile, so it's essential to diversify your investments and protect your money. ...
  • Bonds. The first option is to invest in bonds. ...
  • Real Estate. The second option is to invest in real estate. ...
  • Gold. ...
  • Fixed Index Annuities. ...
  • Next Steps.

Where can I invest for short term 6 months? ›

  • Bank savings accounts: Savings or checking accounts are highly-accessible short term investment options. ...
  • Fixed Deposits at a Bank: ...
  • Short-Term Debt Funding: ...
  • Mutual Funds for Arbitrage: ...
  • Money Market Investment Trusts: ...
  • Fixed Maturity Plans (FMPs): ...
  • ETFs for Gold: ...
  • Term Deposits at the Post Office:

What sectors are expected to do well in 2023? ›

Will the same sectors rally in Budget 2023 like the previous one? Last budget, sectors like banks, capital goods, FMCG, pharmaceuticals, IT, real estate, and metals did well. This Budget 2023, Sharma expects banks, capital goods, and Pharma to rally post the budget announcement.

Which industry will grow in next 5 years? ›

List of the Top Sectors in India that are Most Likely to Provide Excellent Returns-
  • Healthcare and Insurance Sector. ...
  • Renewable Energy Sector. ...
  • IT Sector. ...
  • Real Estate Sector. ...
  • Fast Moving Consumer-Goods Sector (FMCG) ...
  • Automobile Sector.
May 19, 2022

What to expect in 2023 recession? ›

Many economists are predicting that the United States will likely tip into a mild recession in 2023. That means economic growth and the labor market would weaken, but a downturn could be relatively brief and not too painful.

Which stock will double in 3 years? ›

DD's Stock Doubling in 3 years
S.No.NameQtr Profit Var %
1.SRF25.77
2.P I Industries45.82
3.Trent-1.31
4.Tata Elxsi39.06
22 more rows

Which company to invest in 2023? ›

Best Stocks to Buy in India for Long Term for 2023
S.No.Long Term Stocks IndiaIndustry
1.Reliance IndustriesMultinational Conglomerate
2.Tata Consultancy Services (TCS)Information Technology
3.InfosysInformation Technology
4.HDFC BankBanking
1 more row
Jan 12, 2023

Which stock can be multibagger in 2023? ›

The Most Overlooked Ingredient of a Multibagger Stock
Company NameStock Price 10 Years BackCurrent Stock Price
Cholamandalam Investment and Finance Company Ltd.41787
Adani Enterprises Ltd.1753,024
Page Industries Ltd.2,99650,137
Eicher Motors Ltd.2183,463
14 more rows

What can I invest in to make money fast? ›

  1. How to invest $1,000 to make money fast.
  2. Play the stock market.
  3. Invest in a money-making course.
  4. Trade commodities.
  5. Trade cryptocurrencies.
  6. Use peer-to-peer lending.
  7. Trade options.
  8. Flip real estate contracts.

Where can I park my money for one year? ›

Six Best Investment Plans for One Year
  • Liquid funds. These are one of the most popular methods of parking short term funds up to one year. ...
  • Ultra-Short Duration Funds. ...
  • Low Duration Funds. ...
  • Money Market Funds. ...
  • Floater funds. ...
  • Arbitrage funds.

Where can I invest my money to get good returns in 5 years? ›

Listed below are some of the best investment plans for 5-years that you should consider investing:
  • ULIPs. How many investment options these days offer multiple benefits? ...
  • Traditional Plans. ...
  • Recurring Deposits: ...
  • Monthly Income Schemes: ...
  • Fixed Deposits: ...
  • Savings Account: ...
  • Liquid Funds:

Which bank gives 7% interest on savings account? ›

Do Banks Offer 7% Interest On Savings Accounts? 7% interest isn't something banks offer in the US, but one credit union, Landmark CU, pays 7.50% interest, though there are major requirements and stipulations.

Where should I hold my cash when it's not invested? ›

A checking account can help cover daily spending needs, check-writing, and ATM usage. Bank checking accounts are insured by the Federal Deposit Insurance Corporation (FDIC), an independent agency of the US government, against the loss of up to $250,000 per depositor, per insured bank, based on account ownership type.

What is the best thing to do with a lump sum of money? ›

What might you choose to do when you receive a lump sum of money? Some options might include paying down debt, building your emergency fund, investing, fund your retirement accounts, funding an HSA and more.

How can I get 10% interest? ›

HOW TO EARN A 10% ROI: TEN PROVEN WAYS
  1. Paying Off Debts Is Similar to Investing. ...
  2. Stock Trading on a Short-Term Basis. ...
  3. Art and Similar Collectibles Might Help You Diversify Your Portfolio. ...
  4. Junk Bonds. ...
  5. Master Limited Partnerships (MLPs) ...
  6. Investing in Real Estate. ...
  7. Long-Term Investments in Stocks. ...
  8. Creating Your Own Company.
Oct 26, 2021

Where can I put $20000? ›

How to invest $20k: 8 ways to make your money work for you
  • Invest with a robo-advisor.
  • Invest with a broker.
  • Do a 401(k) swap.
  • Invest in real estate.
  • Put the money in a savings account.
  • Try out peer-to-peer lending.
  • Pay for an education.
  • Pay off debt.
Oct 19, 2022

Where do millionaires keep their money? ›

Stocks and Mutual Funds

Many millionaires and billionaires made their money — at least in part — by investing in the stock market, or by owning stock in companies they started or worked for.

Will 2023 be a good year for the stock market? ›

Most stock market forecasts for 2023 see moderate improvement. UBS targets a year-end 2023 S&P 500 at 3900 and KKR sees it at 4150. CFRA expects a 2.9% gain, which would put the S&P over 3900. It closed the year around 3840.

Is 2023 a good year to invest? ›

Stocks are down

When something's cheap you can buy more of it for the same price, which makes 2023 a great time to start investing. Using the ratio of stock prices to corporate earnings as a measure of valuation, the S&P 500 now trades its cheapest level in years.

How to make money in 2023? ›

Here are a few ideas:
  1. Create and sell an online course or e-book.
  2. Become an affiliate for products and make money with affiliate marketing.
  3. Sell your art or photography online.
  4. Rent out your car or a room in your home.
  5. Build a website and install ads.
  6. Create and sell an app.
  7. Set up a dropshipping business.
Sep 6, 2022

Will stocks get better in 2023? ›

“We feel that going into the fall, the stage will be set for a strong recovery from the 2022-2023 cyclical bear market,” says Keller. But even if that stock recovery slips into 2024, a down market simply provides more time for long-term investors to make their investments at lower prices.

Should I pull my money out of the stock market? ›

Although the stock market produces volatile returns, it has a long history of outpacing inflation in the long run. So, if the money you have invested in the stock market isn't going to be used in the next few years, it's likely safer to keep your money invested than to take it out.

How low will stock market go in 2023? ›

Analysts at the bank have revised their EPS estimates for the S&P 500 down to $195 next year, which gets them to 3,900, assuming a 20x earnings multiple. Still, the analysts expect a challenging year of earnings to hammer markets in the first half of 2023, bringing the S&P 500 into the range of the low 3,000s.

Will 2023 be a bear market? ›

The average forecast expects the S&P 500 to end 2023 at 4,009, according to Bloomberg, the most bearish outlook since 1999.

What to expect from stock market in 2023? ›

Markets may continue to face choppiness in 2023 as investors navigate potentially declining earnings and rates that stay high for longer than expected. However, I believe it's most likely that the market won't experience a significant downtrend (or uptrend) for the year, and may instead follow a sideways path.

What will 2023 be the year of? ›

That makes 2023 the Year of the Water Rabbit.

Which zodiac signs will be lucky in 2023? ›

Answer: Taurus, Gemini, Cancer, Leo, Libra, Sagittarius, and Pisces will be financially lucky in 2023.

How can I become a millionaire in the next 5 years? ›

Here's how you can become a millionaire in five years or less.
  1. Select your Niche. ...
  2. Put aside 20% of your income every month. ...
  3. Don't spend anything other than essentials. ...
  4. Get out of debt as quickly as possible. ...
  5. Start building Passive Income Streams.
Sep 28, 2022

How can I make big money in short time? ›

Learn more about what you could do to earn an extra income in as short as one day with these thirty-three ideas.
  1. Drive With Uber or Lyft. ...
  2. Presell Your Labor. ...
  3. Perform Seasonal Jobs. ...
  4. Sell Your Clothes. ...
  5. Become a Tutor. ...
  6. Sell Your Furniture. ...
  7. Have a Yard Sale. ...
  8. Sell Your Books.
Jan 31, 2022

Will there be a financial crisis in 2023? ›

We expect a U.S. recession in the first half of 2023, as well as a continued global economic slowdown, as last year's hawkish monetary policy and money growth slowdown works with a lag. That should drive down corporate earnings growth and create important inflection points for investors over the next nine to 12 months.

Which stock is best for next 5 years? ›

Growth stocks for next 5 years
S.No.NameCMP Rs.
1.Brightcom Group28.25
2.Easy Trip Plann.55.55
3.Balu Forge88.25
4.AVT Natural Prod104.20
22 more rows

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3. How To Use The 2023 Recession To Get Rich
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4. Warren Buffett Explains How to Invest in 2023
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5. What Are The Top Stocks Of 2023?
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