Short-term investment is one type of investment that can help someone achieve their financial goals in a short time. Today, more and more people are interested in making short-term investments because of the quick returns and lower risks compared to long-term investments.
However, the many types of short-term investments available on the market can make someone confused in choosing the type of investment that suits their needs and risk profile.
Therefore, this article will discuss 10 types of short-term investments along with examples and their advantages. Thus, it is hoped that you can choose the right type of investment to achieve your financial goals in a short period of time.
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Types of Short Term Investments and Examples
Short-term investment is a type of investment made with the aim of obtaining profits in a relatively short time, usually between 1-5 years. Short-term investments usually have lower risks and higher liquidity compared to long-term investments.
The choice of the right type of investment must be adjusted to the risk profile and investment objectives of each individual. Check out the following 9 types of short-term investments along with their risk profiles and examples.
1. Time Deposits
Time deposit is a type of short-term investment that provides fixed interest for a certain period of time, usually 1-12 months and Time deposits are relatively safe because the funds invested are insured by the Deposit Insurance Corporation (LPS).
Examples of financial institutions that provide time deposits are Bank Mandiri, Bank Central Asia (BCA), and Bank Rakyat Indonesia (BRI).
2. Bonds
Bonds are debt securities issued by companies or governments to borrow money from investors. Short-term bonds usually have a tenor of 1-5 years and provide fixed interest. An example of a short-term investment in Indonesian government bonds is the ORI and SR series Government Bonds (SUN).
3. Money Market Mutual Funds
Money market mutual funds are investments in money market instruments, such as time deposits, money market securities and certificates of deposit. This investment provides relatively stable returns and low risk. Examples of short-term investments in money market mutual funds are Sucorinvest Money Market Fund and Manulife Saham Likuid.
4. Blue Chip Stocks
Blue chip stocks are shares of large and well-known companies that have a good reputation and stable financial performance. Blue chip stocks are relatively stable and can provide dividends. Examples of blue chip stocks in Indonesia are PT Bank Central Asia Tbk (BBCA), PT Unilever Indonesia Tbk (UNVR), and PT Telkom Indonesia Tbk (TLKM).
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5. Gold Investment
Gold investments can be made in physical form such as bars and jewelery or in the form of precious metals. Beside Gold usually has a stable value and can provide benefits in the short term. Examples of manufacturers or official gold investment institutions in Indonesia are PT Antam Tbk and PT Pegadaian (Persero).
6. Fixed Income Savings
Fixed income savings are savings with fixed interest given on a monthly or annual basis. This savings is suitable for emergency fund needs or preparation of education or retirement funds. Examples of banks that provide fixed income savings are Bank Central Asia (BCA) and Bank Negara Indonesia (BNI).
7. Peer-to-Peer Lending
Peer-to-peer lending is an investment made through an online platform that connects lenders with borrowers. Investors can lend their money in small amounts to individual borrowers or businesses that need funds. Examples of m peer-to-peer lending platforms in Indonesia are KoinWorks and Investree.
8. Trading Forex
Forex trading is an investment that involves exchanging foreign currencies. This investment can provide profits in a short time but also has a fairly high risk. Examples of forex brokers in Indonesia are FBS and Instaforex.
9. Cryptocurrency
Cryptocurrency is an investment that involves digital currency generated through blockchain technology. This investment can provide large profits but also carries high risks. Popular examples of cryptocurrencies are Bitcoin, Ethereum, and Dogecoin.
Short-term investments can be the right choice for someone who wants to achieve financial goals in a short time. However, make sure to choose the right type of investment so that your financial goals can be achieved in a short time.
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Advantages of Short Term Investment
Short-term investments can provide benefits for investors in a relatively short time. Here are some of the advantages of short-term investing:
1. High Liquidity
Short-term investments usually have high liquidity, meaning investors can easily withdraw their investments and get their money back. This can be an advantage for investors who need money in a short time, such as to pay bills or other urgent needs.
2. Quick Profit Potential
The profit potential from short-term investments is faster than long-term investments. For example, time deposits usually provide fixed interest for a certain period of time, so that investors can get profits quickly.
3. Portfolio Diversification
Short-term investments can be one way to diversify your investment portfolio. By investing in several different types of short-term investments, investors can minimize investment risk and increase potential returns.
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4. Lower Risk
Short term investment risk is lower than long term investment. This is because a shorter investment period can minimize market risk or changes in economic conditions.
5. Investment Flexibility
Short-term investments can give you flexibility in choosing the type of investment that suits your risk profile and investment objectives. You can choose the type of investment that has a level of risk according to your risk tolerance and can adjust your investment to the latest financial needs.
It can be concluded that short-term investment is one type of investment that can help someone achieve financial goals in a short time.
The many types of short-term investments available on the market allow investors to choose the type of investment that suits each individual’s risk profile and investment goals.
Short-term investments provide many advantages for investors, such as high liquidity, quick profit potential, portfolio diversification, lower risk, and investment flexibility. However, keep in mind that the choice of the right type of investment must be adjusted to the risk profile and investment goals of each individual.
Thus the article about short-term investments that you need to know.