Do you want to invest a small amount of money as a young adult and get a high return? If YES, here are 50 best short term investment ideas for beginners. In this low interest environment where CDs and mortgage rates are at an all-time low, trying to make a huge amount of money in a short time is quite hard. However with good research, you can spot out some investment ideas that have the possibility of generating high returns in a short term.
What is a Short Term Investment?
A short term investment is typically any business with an expected maturity date that does not exceed 4 years. It could however be as brief as a day, a week or even a month. Here are some investment ideas that fit into the aforementioned parameters.
1.Pay Off your Debt
This may be quitesurprisingbut in reality whenpracticedjudiciously, it can helpyouto earn more in a short term. People who have credit card debt, consumer loans, student loansetc.pay highinterest rates when theywant to invest in the short term. If you are only going to get 2 to 6percentof an investment in the short term and then you are paying 8 to 12percenton credit card debts and other similar debts, then the aim of investing isdefeated.
Therefore, if you want to make money in the short term, you will first need to pay off your debt. By doing so, you are going to make returns on whatever thestatedrate is.For example, if you owe a credit card debt with a balance of $15,000 that accrues 14 percent interest, you will find out that if you settle this debt, it will be like getting 14 percent return on the $15,000 you invested.
2. Real Estate
Short terminvestment in realestate is also known as flipping. It simply involves buying a property at a low cost, renovating it and then selling it a higher price. Flipping in real estate requires a lot of capital and expertise as the process can be quite technical but it can also be quite profitable in a short term like say in 3 months. So if you have an eye for properties with potentials, you can go ahead to buy, renovate and sell it off in the short term to make your profit.
3. Buy a CD
Certificate ofDepositcan purchased directly fromaissuing bank. The savings term of CDs typically range from one monthtoa couple of years. In return the issuing bank pays a fixed rate for thedurationof the term. Some institutions offerhigherinterest rates for higher deposits. When they are paid you can receivedisbursement viacheques.
4. Peer to Peer (p2p) Lending
P2p lending companies such as lending club offer a very unique way of making money in the short term. Basically, you become the banker, you loan the money out and you are getting paid the interest rate that a bank would normally receive when you take a loan. Certain websites help to connect people who are willing to invest to people who are in need of loans on a monthly basis. Investors in such websites will get loan repayment as well as interest.
5. Binary Option
A binary option is a financial tradable option that simply requires one to predict the direction the asset will move. Wheninvesting inbinary options, you will not be required to specify the exact amount ofmovement;all you need to doisto specify if it will go up or down. If you predict correctly, you will win.
In binary option, you will either get as specific amount as returns or nothing at all. There is no middle ground with binary options. You can make up to 94% of your investments in just a few minutes. However, the market is quite volatile and stochastic and as such binary option poses a greater risk for investors.
6. Forex Trading
Forexalso known as foreign exchangecan be traded on a short term. Itsimply involves betting the value of a currency against other currencies. It is quite lucrative but the risk that is associated with it is also very high. A trade session can last for a few minutes to a few days or months and if you are able to study and understand how the system works, you can reap a huge amount of profit within a very short period of time.
7. Leverage Oil ETF
Leverage oil ETF tries to generate a large profit on the pricing of some natural resources through the use of future contract. Due to the high volume of trade activity, leverage oil ETF tends to be very volatile, therefore it can offer investors huge returns or losses if the trade goes wrong.
8. Short Term Bonds
Shortterm bonds are usually only managed by professional financial advisors. Bonds are a lot more volatile when compared to the money market but they also offer the added advantage of being more profitable. Due to the fact that bonds come as a result of the market and are subject to the conditions and vagaries of the market, it is expected that their payout will vary with each monthly payout. Typically, a short term bond is expected to have a life cycle that does not exceed two years. A brokerage account is needed in other to trade bonds.
9. Options:this involves timing of the market. Here an investmentcan purchase a stock at a particular price with a date that is set in the future. This investment provides high returns but is equally dangerous.
10. Real Estate Investment Trust (REIT)
Thisis a relatively new financial innovation that was created to make it easier for individuals to gain exposure to real market investment. Before REIT, investors need a lot of money to invest in commercialreal estate.Oftenreal estate was owned by partnership and only certain types of investors were able to participate in the real estate partnership, those with a lot of capital.So, accessing the realestate marketwas difficult for a lot of people.
However, REIT was later signed into law. It is a new type ofcorporationthatdemocratized realestateinvestment and made it easier to gain exposure to investments in real estate. An REIT is a typeofcompany thatinvestsin the portfolioofrealestates. Investors can participate in the gain and loss of aportfolioby buying shares of an REIT.
Buying an REIT is somehow similar to buying the stockof a company. Due to the varying interests in the real estate market, REIT’s are prone to swings in response to developments in the overall economy, levels of interest rate and the current state of the market. The stochastic nature of the real estate market makes REIT a risky investment, yet it can also be extremely rewarding in the short term.
11. Trust Deeds
Also known as a deed of trust, this is a type of mortgage used in someplaces. Itinvolves the transference of the title from the borrower to the trustee to protect thebeneficiaryuntilthe loanis paid back infull. Trust deeds usuallyyield back its collateral with very low loan value. Trust deeds can provide monthly cash flow through the fixed income investment.
12. Mutual Fund:this is offered by investment companies who collate money from various individuals and bring them together in one purse for investment purposes. The funds may then be invested in stocks,bonds,real estate etc. An investor can buy a share in the mutual fund company. This represents his ownership of the mutual fund.
13. Post Office Term Deposits:this is a plausible alternative to the stock market and other such related investments. Itpossess very little risk while investing and can yield as much as 11% returns in a year.
14. Secured NCD’s
Non-convertible debentures are fixed income debt instruments that are offered by companies to individuals.With secured NCD’s, companies pledge assets as security for business needs of the company. This is simply borrowing from the public.Therefore, you lend and the company borrows when an individual purchases asingle debenture (also known as principal amount).
Every NCD is issued for a fixed period of time during this period. The company pays a fixed interest either monthly, quarterly, annually or an accumulated payment on maturity. At the end of the tenure, the company pays investors back the principal and the accruing interest. NCD’s offer benefits like liquidity and capital appreciation.
15. Company FD’s
Many companies are willing to offerfixeddepositsin other to gain their working capital. Due to the fact thatgetting interest on the fixeddepositthat individuals will offer is quite cheaper than taking a loan from a traditional bank, so this makes the option ofofferingfixeddepositattractive to them. Company fix deposits can range between 8 to 10percent.
16. Arbitrage Funds
This type of equity mutual fund involves the buying and selling of an asset in two or more different markets in order to make profit from the price margin that exists between the two. The idea behind arbitrage fund is simple enough; buy a security for a lower price in market A and sell at a higher price in market B. The more volatile a market is, the more opportunities for arbitrage arise.
17. Fixed maturity plans (FMP’s)
FMP’s arecloseended schemes (close ended in thesensethat once the new fund offercloses, the scheme cannot acceptany further investment) with a pre-defined maturityperiodwhich invests in various debt assets allocation such as debt instrument, certificate of deposit (CD’s) and commercial papers (CP’s). FMP’s provide an investor with a source of income that arises from low risk interest payment. FMP’s usually have a maturity period of one-month to 5 years.
18. Online bank
You can open an online savings,chequingaccount and an online money account all over the internet.Onlinebanks offer fairly attractive interest rates as opposed to the normal banks that are usually very low. Additionally, online banks wave away certain transaction costs that normal financialinstitutions impose. Online institutionsto a large extent offer a lot of services that are obtainable in normal banks.
19. Credit Card Rewards
Credit card rewards offers you easy cash on your regular credit card usage. There are several credit card reward programs that offer asmuch as 5% rewards on credit card use. All you need to do is just to use your credit card on a more regular basis. This type of offer is however limited only to customers who pay off their debt in full every month.
These are ETF’s that can be likened to a combination of the returns of a bond fund and a fixed maturity certificate of deposit. Normal bonds do not have an end, rather they are sold off as they age and are replaced with new ones, bullet shares on the other hand run for a defined period of time say, one to ten years. Bullet shares may be corporate bonds or high yield corporate bonds. The former invests in investment trade corporation bond while the later buys bonds issued by corporations with a credit rating below investment grade.
You can purchase coins or bullion gold bars and sell them off at a later date when the price has appreciated for a profit. The vagaries in the price of gold is usually dependent on some certain factors such as the economy, interest rates, strength of the dollar, among others, yet the price of bulliongold hasdoubled since the past 4 years.Short term gold investorsusually buy their gold and hold them for period of 13 months to 2 years before selling them off. Buying when the price is low and selling off at the peak guarantees remarkable profits.
Blogging involves keeping a personal web log in which one can journal about news, events, technology and even their day to day activities. Blogging has risen to prominence in recent times because of the ease involved in setting it up and the profitability that is associated with the activity. If you can choose the right niche and with contentious effort, you can be able to generate a lot of traffic to your blog which will ultimately translate to profit.
Starting up a candy, sweetmeat, pastry or cake shop can be a very viable investment because the aforementioned food items are always in demand. You can start up small from your local market and then spread your tentacles from there. Confectioneries can generate a modest income in a short amount of time with proper business planning.
24. Fruit Juice
Each year, tons and tons of fruits areharvest or imported intotheUnited Statesof America. These fruits are readily available and as such they present an opportunity for entrepreneurs to take advantage of. Fruit juice production requires raw materials such as apple, pineapple, oranges, grapesetc. that are readilyavailable and at cheapprices too. By establishing a fruit juiceplant, youcan take advantage of this niche and get a lot of returns within a short period of time if is well managed.
25. Poultry Farm
Poultry and its products constitute a staple food for Americans citizens. Poultry farming in the is usually done on a large scale where big corporations are contacted to buy the birds and their products even before maturity. Return on investment (ROI) of a commercial poultry is high and in a short time, the initial investment can be recouped and further profits generated.
26. Dry Cleaning Franchise
In the USA, the laundry franchise industry is estimated to have a value that exceeds $10 billion. Even when the country’s economy had gone into recession several times, the dry leaning industry was not affected because clothes always need to be washed irrespective of the state of the economy.
Dry cleaning involves washing, ironing and general care of clothes. Engaging in a franchise with companies such as Speed Queens,MartinisingDry Cleaning, Wave Max among others can help you rise on the wings of such big wigs to generate income in a short amount of time.
27. Unit Investment Trust (UIT)
These are companies that bring together many investments under one unit. Such investments may be a stock or bond.These units are sold off to investors at a stated time and they are expected to grow and generate addition profit within a given period of time.
28. Paintings, Coins and Collectibles
Art, stamps, cars, antiques and other rarities have of recent gained more popularity. Investing in them is also not as technical as investing in stocks or bonds because art and antiques are invested in for just buying and selling. You buy them, hold them for a time and then scout for buyers who you will them sell to at a higher margin.
29. Floating Rate Funds
Also known as bank loan fund, these are mutual funds that hold loans made by corporations. This financialinstrument hasa variable interest rate and are said to“float”. Due to the changing nature of interest rates, investors get higher interest payment from floating rate funds. Floating rate funds are best in periods of expected increase in interest rates.
30. Trash Management
Waste Management is big business in America today.Trashand municipal solid waste amounts to about 251 million tons each year and this provides an opportunity for investment. Even though trash management is dominated by mainly large corporations, a lot of private individuals also take advantage of the opportunities that exist in the management of garbage to make money.
Short term investments are usually risky. The higher the return, the greater the chance that an investor can lose all his or her investment. When choosing a short term investment with high return, you should first know your risk tolerance considering that you can lose all your money.
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As an enthusiast with a deep understanding of investment strategies and financial markets, I would like to share insights into the concepts mentioned in the provided article on "50 Best Short Term Investment Ideas for Beginners." My expertise comes from years of practical experience, continuous learning, and staying abreast of market trends. Let's delve into the key concepts:
Short Term Investment:
- Definition: An investment with an expected maturity date not exceeding 4 years, ranging from a day to a few months.
- Purpose: To generate high returns in a relatively short period.
Pay Off Your Debt:
- Insight: Clearing high-interest debts before investing can provide returns equivalent to the interest rate on the debt.
Real Estate (Flipping):
- Strategy: Buy, renovate, and sell a property at a higher price for a profit.
- Considerations: Requires capital, expertise, and an eye for properties with potential.
Certificate of Deposit (CD):
- Definition: A fixed-term deposit with a bank, offering a fixed interest rate for the duration of the term.
- Considerations: Varies in duration, higher deposits may yield higher interest rates.
Peer-to-Peer (P2P) Lending:
- Approach: Act as a lender, earning interest by loaning money to individuals through online platforms like Lending Club.
- Definition: Financial tradable option predicting the direction of asset movement.
- Risk: High volatility, potential for significant returns or losses.
- Approach: Trading currencies against each other for potential profits.
- Risk: High market volatility, short-term trading sessions.
Leverage Oil ETF:
- Strategy: Generate profits by speculating on the price movements of natural resources using future contracts.
- Risk: High volatility, potential for substantial gains or losses.
Short Term Bonds:
- Nature: Managed by professional financial advisors, more volatile than the money market.
- Advantage: Potentially more profitable than traditional bonds.
- Approach: Timing the market by purchasing stocks at a set price for future dates.
- Risk: High returns but equally dangerous.
Real Estate Investment Trust (REIT):
- Definition: Corporation investing in a portfolio of real estate assets, allowing investors to buy shares.
- Considerations: Subject to market conditions, economy, and interest rates.
- Nature: Involves transferring the title from the borrower to the trustee to secure a loan.
- Benefit: Provides monthly cash flow through fixed-income investment.
- Definition: Pooled funds from various investors invested in stocks, bonds, or real estate.
- Ownership: Investors buy shares representing their ownership.
Post Office Term Deposits:
- Alternative: Plausible alternative to stock market investments, offering low-risk returns.
Secured NCD’s (Non-Convertible Debentures):
- Nature: Fixed income debt instruments with companies pledging assets as security.
- Features: Issued for a fixed period, offering fixed interest payments.
Company FD’s (Fixed Deposits):
- Purpose: Companies offer fixed deposits to raise working capital.
- Returns: Typically range between 8 to 10 percent.
- Strategy: Buy and sell assets in different markets to profit from price differences.
- Volatility: Higher volatility in the market provides more arbitrage opportunities.
Fixed Maturity Plans (FMP’s):
- Type: Close-ended schemes with pre-defined maturity periods investing in debt assets.
- Income Source: Generates income from low-risk interest payments.
- Convenience: Online banks offer attractive interest rates and waive certain transaction costs.
- Services: Comparable to traditional banks with additional online advantages.
Credit Card Rewards:
- Benefit: Earn cash rewards on regular credit card usage.
- Condition: Limited to customers who pay off their debt in full every month.
These concepts provide a diverse range of short-term investment opportunities, each with its own risk and return profile. It's crucial for investors to understand their risk tolerance and conduct thorough research before engaging in any investment strategy.