3 Types of Profitable Short Term Investments, Beginners Must Know

Rancakmedia.com - Type Investment short term tends to be low risk. If you are interested in this investment, you can choose from five types of investment. In addition to long-term investments, there are additional alternatives for maintaining financial assets, especially short-term investments.

Indeed, investing has recently become a demanding hobby for many people. In addition, the products offered include gold, mutual funds and bonds. However, everyone has their own investment goals, even in the short term.

What is Short Term Investment?

It's a good idea to first understand the definition to understand this type of investment. Investopedia reported that these investments are temporary investments that can usually be withdrawn easily in the short term.

Simply put, this investment is not long-term, so it can be paid off at any time according to the wishes of the investor. Within 3-12 months, the average individual making this investment will turn it into cash. Even though this type of investment is only temporary, it certainly becomes a separate strategy for investors.

By launching The Balance, you can take advantage of rising interest rates over time by making investments. This investment is clearly different from long-term investments, on average more than one year. Everyone has their own investment goals, both long term and short term.

Short Term Investment Advantages and Disadvantages

Each investment has advantages and disadvantages. So, here are some advantages and disadvantages if you make that one investment:

1. Profit

The main advantage derived from this investment, according to the Corporate Finance Institute, is the freedom investors are given to withdraw money.

Because he doesn't have to wait until his assets mature in cash. In addition, another advantage is that investors can earn big profits in a short time.

Therefore, this one investment is suitable for those of you who don't want to wait long to get a return on investment. However, pay attention to the right way to invest in the short term, so you don't make mistakes.

2. Losses

Because it is only short-term, investors need to know the value of investment instruments and spend a lot of time monitoring them. this is done to know when and where to sell and buy.

This is one aspect of investing. In addition, the return on this investment can be reduced by taxes and inflation.

Short Term Investment Types

1. Mutual Funds

This investment tool is often the choice for new investors. Because many apps or websites can now be used to buy mutual funds online.

In general, there are four types of mutual funds, namely mutual funds, fixed income funds, stock mutual funds and mixed mutual funds.

Maybe mutual funds can be one of your choices if you are interested in investing. Besides being easy to use, mutual funds are also easy to diversify your portfolio.

2. Deposits

In addition to mutual funds, investment deposits can also be used. Time deposits carry a lower risk than mutual funds.

Apart from the minimal risk, deposits can now be found in almost all banks. When you deposit some of your money in the bank, the value of the money will increase because of interest.

However, the right moment to save at the bank must also be determined. It depends on your needs, whether in three months, six months or even one year.

The drawback of time deposits is that the interest earned is not high enough to overcome inflation every year.

3. P2P lending

Investing through P2P can also be your choice if you only want the short term. You can now find fintech businesses that are regulated directly by the OJK.

Some of the businesses that are officially under its auspices report from the OJK:

• Danamas
• investree
• Amartha
• Friends Money
• Smart Credit
• and others

Just choose one, then invest into it. Later, you can benefit from loan interest rates.

Conclusion

That's kind short term investment or a temporary investment that can be withdrawn easily in the short term. Balance, this investment, has advantages and disadvantages if you make that one investment.

This investment is different from long-term investments because you don't have to wait for the assets to mature in cash. Because it is only short-term, investors need to know the value of an investment and spend a lot of time monitoring it.