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Key Points

  • We’ve curated 15 of the best short-term investments. Continue reading to learn more.
  • Short-term investments can give you good returns compared to long-term investments, you just need to find the right investment.
  • High-yield savings accounts, short-term bond ETFs, and peer-to-peer lending are all examples of short-term investments that can give you good returns.

There are short-term investments that can earn you up to 5% or more in interest. And yes, these are safe investments. You might think that sounds unrealistic. What you’re about to learn in this article will show you that these short-term, high-yield investments do exist.

You just have to know what they are and where to find them. All of this will be revealed to you right now.

Continue reading to learn what the best short-term investments are.

15 best short-term investments

1. High-yield savings account

A high-yield savings account is the safest short-term investment you can find. Not only is your money highly liquid and easily accessible, but it’s also insured by the FDIC, which means it’s protected up to $250,000 in the event of a bank failure.

You may be wondering, why not just put my money in a traditional savings account or a checking account?

Simple: According to the FDIC, a traditional savings account will only earn you 0.06% APY on average. Checking accounts are even worse. Those will only earn you 0.04% APY on average.

That means for every $1 you have in a traditional savings account, you are only earning $0.06 in interest per year. And $0.04 per year with a checking account. That’s not even enough to beat inflation, which means you’ll technically be losing money in your traditional savings account.

That’s why you have to use a high-yield savings account instead. High-yield savings accounts are no different than traditional savings accounts in terms of how they’re set up. Both are savings accounts, can be easily accessed, and are federally insured.

To set up a high-yield savings account, you won’t have to jump through any complex hoops. Just find a bank that offers savings accounts with interest rates of 1% or higher. I’ve listed a few below for you to consider.


  • High-interest rates — Usually have higher interest rates when compared to traditional savings accounts or checking accounts.
  • FDIC insured — If the high-yield savings account is opened with an FDIC bank or NCUA credit union, it is protected up to $250,000.
  • Highly liquid — Easily access your money without paying any fees or penalties.


  • High balance requirement — Some high-yield savings accounts require minimum deposits of up to $5,000 – $25,000. This high requirement makes them not great if you’re looking for short term investments for small amounts of money.
  • Monthly direct deposit requirements — Some high-yield savings accounts require minimum monthly payments, such as $100, to waive any account fees.
  • Minimum number of monthly transactions — You are usually limited to 6 transactions per month.

2. Money market account

Money market accounts are another type of savings account. Like the high-yield savings account, money market accounts pay better interest rates on your savings than a traditional savings account.

You might be wondering: should I invest my money short term in a high-yield savings account or a money market account? What’s the difference between the two?

The biggest difference is that money market accounts typically come with checkbooks and ATM cards, whereas high-yield savings accounts don’t. Other than that, the two are nearly identical. 


  • High-interest rates — Usually have higher interest rates when compared to traditional savings accounts or checking accounts.
  • FDIC insured — If the money market account is opened with an FDIC bank or NCUA credit union, it is protected up to $250,000.
  • Highly liquid — Easily access your money without paying any fees or penalties.


  • High balance requirement — Some high-yield savings accounts require minimum deposits of up to $5,000 – $25,000. This high requirement makes them not great if you’re looking for short term investments for small amounts of money.
  • Monthly direct deposit requirements — Some money market accounts require minimum monthly payments, such as $100, to waive any account fees.
  • Minimum number of monthly transactions — You are usually limited to 6 transactions per month.

3. Certificate of deposit (CD)

CDs allow you to invest money at a fixed interest rate over a specified length of time. So what does that mean? Let’s break it down.

Unlike a savings account where your cash earns interest and is easily accessible, CDs are time deposits. This means that to earn interest on your money, you have to complete the specified term length.

If you withdraw your money before the term length ends (also known as the maturity date), you will be charged a penalty. The penalty can sometimes whip out month’s worth of interest, so it’s good to avoid it.

CD term lengths vary from 1, 3, and 6 months to 1 year or more.  Typically the longer the term length of the CD, the more money you will earn. The shorter the length, the less you’ll earn.

But the question still remains, why use a CD as a short-term investment instead of a savings account? Depending on the market, CDs can pay better than saving accounts. Additionally, CDs have fixed interest rates, which make them safer investment options.

Most investments, even short-term investments, have interest rates that fluctuate. This is also known as a variable interest rate. This means that the interest rate of your investment can go up or down over time, depending on the market (or federal funds rate).

If you prefer to lock in your interest rate, then CDs are another great short-term investment option. But keep in mind that because a CD is a time deposit investment, you won’t have access to your money until the maturity date.

For example, say you invest $1,000 into a 5-year CD. If an emergency comes up and you need access to that money, you will have to pay the penalty for early withdrawal. Bankrate breaks down the cost of an early withdrawal based on various term lengths. CDs are a great way to invest your money short term. However, continue reading to find more alternatives to CDs.


  • Better interest rates than a savings account — Can offer higher interest rates than savings account and money market accounts.
  • Fixed interest rate — Pays a fixed interest rate. If federal interest rates go down, your CDs’ interest rate will stay the same.
  • FDIC insured — If the CD is opened with an FDIC bank or NCUA credit union, it is protected up to $250,000.
  • Forces you to save — Since you will be charged a penalty if you withdraw your money early, you will be forced to not touch it, which is great for long term saving.


  • Zero liquidity — You won’t have access to your money unless you pay a fee to withdraw early
  • Fixed interest rate — Pays a fixed interest rate. Even if federal interest rates go up, the CDs’ interest rate will stay the same.

4. Short-term corporate bond funds

Corporate bonds are debt securities issued by corporations to investors to raise money. Instead of corporations taking out high-interest loans from banks, they simply issue bonds to investors at much lower interest rates. Interest is typically paid out to investors quarterly or twice a year, similar to dividends on stocks

Corporate bonds are often categorized by one of two ratings: investment-grade bonds and non-investment-grade bonds (also known as high-yield or junk bonds). Investment-grade bonds are bonds issued by corporations with a healthy financial history. These corporations are more likely to make interest payments and return the investor’s principal, or original investment.

And like you may have already guessed, non-investment grade bonds are bonds issued by corporations with a not-so-healthy financial history.

Investment-grade bonds tend to be lower risk, therefore, pay lower interest rates. Non-investment grade bonds pay a higher interest rate but have a higher chance of defaulting. With a non-investment bond, there’s a higher potential for you to lose your money.

It’s the same principle as a bank loaning money to a person with an 800 credit score versus someone with a 540. The person with the 540 score is seen as a high risk. Therefore the only way the bank will loan them money is if they are paying high interest. However, the person with the 800 credit score will likely get a low-interest rate because the bank doesn’t see them as a risk.

Corporate bonds work the same way. Investment-grade corporate bonds are the person with the 800 credit score, and non-investment-grade corporate bonds are the person with the 540 score. So, how do you decide between investing in investment-grade corporate bonds or non-investment-grade corporate bonds? 

If you want a quick return and don’t mind a little more risk for a higher reward, you may consider non-investment grade corporate bonds. However, you might be better off investing in high-yield corporate bond ETFs and mutual funds. These still have higher interest rates but are more diversified investments and, therefore, less risky.

If you want a short term investment that is safe, go with investment-grade corporate bonds. For an even safer money investment, consider investment-grade corporate bond funds such as corporate bond ETFs and corporate bond mutual funds.

Bond funds are made up of multiple corporate bonds, usually across many industries. This creates instant diversification, which means less risk. Here are some of the best corporate bond funds:


  • Highly liquid  Short-term corporate bond funds can be bought and sold any day the stock market is open, making them very liquid.
  • Less risky — Since you are only holding the bonds for a short period of time, your investments experience less risk exposure to the market.


  • Not protected — Short-term corporate bonds are not insured by the government, so in the highly unlikely event that the company goes bankrupt, you could lose your money.

5. Short-term US government bond funds

US government bonds are like corporate bonds. Except instead of being issued by corporations, they are issued by the US government.

Government bonds are issued to raise money for various projects and day-to-day operations. Governments do this instead of printing more money or raising taxes (both of which would have detrimental effects on the economy).

Unlike corporate bonds, government bonds are not rated as investment grade or non-investment grade. That’s because all government bonds are backed by the full faith of the United States government. The only way you can lose your money when investing in US government bonds is for the federal government to default, which is highly unlikely.

However, because of this low risk, government bonds tend to pay lower interest rates, similar to investment-grade corporate bonds.

Government bond funds can be purchased as ETFs or mutual funds and come bundled with various Treasury securities such as T-bills, T-bonds, and T-notes. Here are some of the best government bond funds:


  • Low default risk — US government bonds are considered low risk since they are backed by the full faith and credit of the United States federal government.
  • Tax advantages — US government bonds have tax advantages that other short-term investments don’t have such as interest payments being exempt from state and local taxes.


  • Interest rate risk — Like with any bond, US government bonds face interest rate risk. This happens when the market interest rates rise beyond the bond’s face value.

6. Municipal bond funds

Municipal bonds are similar to US government bonds in that both are issued by governments to raise money. The difference is that municipal bonds are issued by state and local governments instead of the US federal government.

Municipal bonds are used to fund day-to-day operations and to finance projects such as building schools, highways, and sewer systems.

There are two common types of municipal bonds:

  • General obligation bonds which are backed by the full faith and credit of the government, which has the power to tax residents to pay back investors.
  • Revenue bonds which are not backed by the government’s taxing power.

You can learn more about both types of municipal bonds here. In your case, you wouldn’t want to invest in individual municipal bonds, but instead municipal bond funds such as ETFs. A municipal bond ETF will ensure that you are getting maximum diversification while also keeping your investment more liquid and easy to access.

Want to start investing in municipal bond funds short term? Head over to to view a full list of the best municipal bond funds.


  • Tax advantages — Interest paid on municipal bonds are often tax-free, making them ideal for investors seeking to maximize their short-term investments.
  • Passive income — Both general obligation bonds and revenue bonds can generate consistent cash flows.
  • Relatively safe — Since municipal bonds are usually backed by a local or state government, they tend to have low default rates, meaning it’s unlikely you will lose your money.


  • Although safe, they can still default — Yes, municipal bonds are generally safe investments, however, like with any investment there are always risks. Governments can still default on their loans and not pay back investors. For example, Detroit.
  • Interest rate risks — If interest rates rise, bond prices will go down. This is because bonds have an inverse relationship with interest rates. If interest rates go down, bond prices go up. If interest rates go up, bond prices go down.

7. Treasury bills

Treasury bills, also called T-bills, are about the safest short term investment you could make.

Treasury bills are sold to investors at a price below the face value called the discount price. When the T-bill matures, it’s purchased back from the investor at its face value resulting in a profit from the difference.

For example, say you want to invest $100 into a single T-bill (T-bills can only be purchased in multiples of $100). When you purchase the T-bill, you would be buying it at its discount price, typically a few dollars below its face value depending on the economy.

Let’s say you purchased the T-bill at $98. When the T-bill matures, and it’s time to sell it back, it will be purchased back from you at $100, giving you a $2 profit or a 2% return on investment.

T-bills have specified lengths, also known as maturity dates. These lengths range from 4 weeks all the way to 52 weeks. T-bills with longer maturity dates will pay higher interest rates than T-bills with shorter maturity dates.

T-bills are one of the safest short term investments because they are backed by the US government. The only way you would lose your money is if the US government defaulted. 

Considering the government’s taxation ability and the massive size of the US economy, defaulting would pretty much be nonexistent.


  • Very low risk — Because they are backed by the full faith and credit of the US government, T-bills are extremely safe investments.
  • Has various tax advantages — T-bill profits are exempt from state and local taxes and are only taxed on a federal level.


  • Small returns — Due to the low risk nature of this short term investment, they also have small returns that sometimes can’t even beat inflation.
  • Not very liquid — Unlike a savings account or short-term bond ETFs, your investment in a T-bill cannot be easily accessed until the T-bill hits its maturity date.

8. Treasury notes

Treasury notes, also known as T-notes, are almost identical to treasury bills in the way they function. The major difference between the two is that T-notes have maturity lengths ranging from 2 to 10 years, whereas T-bills range from 4 weeks to 1 year.

Depending on your investing timeframe, T-notes may be a better investment than T-bills. For example, if you want to choose the best investment for 5 years, you would go with T-notes. If you only had 1 year to invest, then you would go with T-bills.

Why go with a T-note over a T-bill? Since T-notes have longer maturity lengths, they also tend to pay higher interest. Other than the maturity length and interest rate, there aren’t many things that separate any of the Treasury securities such as T-bills, T-notes, and T-bonds.


  • Very low risk — Because they are backed by the full faith and credit of the US government, T-notes are extremely safe investments.
  • Has various tax advantages — T-notes profits are exempt from state and local taxes and are only taxed on a federal level.


  • Small returns — Due to the low risk nature of this short term investment, they also have small returns that sometimes can’t even beat inflation.
  • Not very liquid — Unlike a savings account or short-term bond ETFs, your investment in a T-notes cannot be easily accessed until the T-bill hits its maturity date.

9. Credit card promotions

Although clearly unorthodox, this short term investment is an extremely low risk way of getting quick returns. However, instead of investing money for returns, you have to spend money.

The point is not to spend money on things you don’t need to get a promotional offer. You only want to spend money on things you would normally be buying. So, where can you find promotional offers on credit cards? A simple Google search will give you hundreds of results.

In addition to finding credit card promotions, it may be beneficial to begin using cashback credit cards if you aren’t already—for example, the Citi Double Cash, which gives 2% cashback on every purchase.

I’ve been using the Citi Double Cash credit card for almost 4 years and have earned thousands of dollars. Another great credit card is the Target RedCard, which saves you 5% on every purchase you make at Target. If you buy your groceries at Target, why not save 5% on your bill every shopping trip?


  • Build your credit score — Actively using (and paying off in full) a credit card allows information such as your credit utilization and payment history to be reported to the three major credit reporting bureaus every month. If you are being responsible, you will see your credit score increase.
  • Save money when you spend money — If you are using a rewards credit card, you will be saving money on every purchase. Although 2% cashback might seem insignificant at first, the savings begin adding up over time.


  • Credit cards can be dangerous — Unless you are responsible, it’s very easy to overspend money that you don’t have in your checking or savings account. That’s one of the dangers of using credit cards.
  • High interest rates — If you find yourself with a revolving balance, you will be hit with high interest charges.

10. Bank account promotions

Similar to credit cards, banks always have promotions. For example, it’s not uncommon to find banks that will pay you $200, $300, even up to $500 to open a bank account with them.

Of course, there are requirements you have to meet, but if you have extra cash lying around that you want to invest short-term without risk, then doing this can give you great returns.


  • Very safe — Your money will not be exposed to any market volatility if it sits in a bank account.
  • Good return on investment — Depending on how great the promotion is and how much you have to deposit to receive the promotion, your ROI could be decent.


  • Money isn’t liquid — Technically, you could easily take money out of the new bank account, however, most bank promotions require you maintain a minimum account balance for several months before they give you the sign up bonus.

11. Roth IRA

A Roth IRA is traditionally seen as a long-term retirement account. And yes, the Roth is an amazing retirement account, but it can also be used to grow short term investments.

A Roth IRA allows you to make withdrawals on your contributions. For example, if you put $1,000 into a Roth IRA, and it grew to $1,200, you would be able to withdraw your original $1,000. However, the $200 must remain in the account, or else you will be penalized if you withdraw it.

But do you see what just happened?

You were able to get back your original $1,000 and earn $200 or 20% on your original investment. But guess what? Now that $200 can sit in your Roth IRA for years to come and continue growing tax-free.

Or, depending on your investment timeframe, you can keep your original $1,000 contribution in your Roth IRA for years and increase your returns even more.


  • Tax-free growth — Since contributions on Roth IRA’s have already been taxed, your investments will experience tax-free growth ad tax-free withdrawals.


  • Contributions are limited to $6,000 ($7,000 if 50 or older) — You are only allowed to contribute a maximum of $6,000 per year into your Roth IRA. That means if you have over $6,000 that you want to invest short-term, you won’t be able to place it all into your Roth IRA.

12. Arbitrage Funds

An arbitrage fund is a mutual fund that exploits the price difference between assets that should have the same price.

For example, say a company has stock that trades on both the New York Stock Exchange and the London Stock Exchange. On the New York Stock Exchange, their stock is trading at $20.00 per share, but on the London Stock Exchange, it’s trading at $20.10 per share.

The arbitrage mutual fund takes advantage of this price difference and buys shares for $20 on the NYSE while simultaneously selling those same shares for $20.10 on the LSE, making a $0.10 profit per share.

This same technique can be used for other assets such as derivatives and ETFs. Arbitrage funds are great short-term investments because they are low risk but can provide good returns.


  • Low Risk  Because securities are bought and sold at the same time, there is virtually no risk involved. If the stock drops overnight, it won’t matter because arbitrage funds only own stocks for a few seconds.
  • Good returns  Arbitrage funds thrive during volatile markets. If you use arbitrage funds as a short term investment during a volatile period, you can expect great returns.


  • Unpredictable returns — As mentioned above, arbitrage funds are most profitable during volatile markets when prices of assets are constantly changing. However, in a stable market, arbitrage funds can provide mediocre returns.
  • High expense ratios — Because arbitrage funds are required to take a lot of trades to capture substantial profit, they can be expensive to have in your portfolio. Especially during stable markets when the returns they give are low.

13. Peer-to-peer loans

Out of all the short-term investments we’ve discussed so far, peer-to-peer loans are probably the riskiest. However, the potential interest you can earn on one of these loans tends to be a lot higher than other short-term investments.

A peer-to-peer loan is exactly what it sounds like—you lending money to someone else. Now, you may be wondering, why would someone want to loan money from me? Couldn’t they just go to a bank?

The answer to that is simple. Bank loans are more expensive. Additionally, if the person has bad credit, they may not be able to get a personal loan from a traditional bank at all.

The entire process of loaning your money to other people is usually facilitated online by financial tech companies. These companies are designed to streamline the entire process. A couple of the more popular services include:

Both these peer-to-peer lending companies typically only work with borrowers who have good or great credit. This is good news for you because it means your investment is at less risk. Since the borrower has good credit, it is assumed that they will not default on your loan, causing you to lose all of your money.

However, one thing to consider when using peer-to-peer lending as a short-term investment is that you lend money to a single individual. Not a powerful government. Not a wealthy corporation. But a single person.

Although this individual has an 800 credit score, they’re still human. They may run into a hardship that causes them to not be able to make interest payments to you or repay back the loan at all. So although peer-to-peer lending can earn you a great return on your investment, it also comes with its own risks.


  • Can have higher returns — Because of the risk involved with peer-to-peer lending, the returns are often much higher than say a CD or government bond. 


  • Riskier than most short-term investments — Because you are lending money to individuals and not governments or corporations, your money is at greater risk.

14. Paying off high-interest debt

Paying off high-interest debt can be one of the best short-term investments you can make starting right now. You’re virtually guaranteed quick high-yield returns.

Think about it. Say you have $10,000 worth of debt on a credit card with a 15% interest rate. Each month you’re collecting over $100 in additional debt due to interest charges.

Can you imagine putting your money into an investment guaranteed to give you a 15% return every month? Credit card lenders know it’s almost impossible to get this kind of return anywhere else. And they love it!

Pay off that high-interest debt as quickly as possible! Then you can get your dollars working hard for you somewhere else building your wealth.


  • Can funnel more money into your investments — High-interest debt eats away at your bank account and prevents you from investing more of your money.
  • Less stress — No one likes high-interest debt. No one likes feeling like they are trapped. No one wants to receive collection calls. No one wants to be in debt.
  • Improve credit score — High-interest debt usually means high credit utilization, missed payments, and revolving credit balances. All of this damage your credit score.


  • There are no cons

15. Investing through a robo-advisor

A robo-advisor can be a great way to invest your money short term, especially if you prefer to be more hands-off. Robo-advisors were introduced back in 2008 during the financial crisis. Although the technology had been around since the early 2000s, it wasn’t yet public.

They were designed to automate your savings and investing goals and to eliminate the need for expensive human advisors.

Using a robo-advisor is simple. When you sign up for one, you’ll typically be asked a few questions about your current financial situation and your financial goals for the future. The robo-advisor software will then design a custom portfolio for you based on a complex algorithm called the Black–Litterman model.

After that, all you have to do is deposit your investment into your robo-advisor account and let it work its magic. Since their inception in 2008, robo-advisors have only gotten smarter and more advanced. Your short-term investments could see some high yields by using one.


  • Hands-off and easy — Robo-advisors automatically rebalance and diversify your portfolio, so you won’t have to worry about it yourself.


  • Management fees — Because of the convenience provided to you, robo-advisors can oftentimes come with high management fees.
  • Account minimums — Many robo-advisors also come with account minimums. For example, Personal Capital has a $100,000 minimum before you can open an account with them. However, there are other robo-advisors from other brokers such as Vanguard and Fidelity that have smaller minimums.

Final Takeaways

Although long-term investing will allow you to see much higher growth in your portfolio, short-term investing can also be a fruitful endeavor.

Take time to figure out your short-term financial goals and use one or more of the ideas in this post to set yourself up for success.

I’d like to also mention that short-term investing doesn’t mean just a few months. Short-term investing can be as much as 5 years. Take that into account when deciding where you want to place your money.

About the author

Joshua Mayo is the founder of The Investor Post, runs a self-branded YouTube channel, and is an avid investor and entrepreneur.