Searching for the best short-term investment alternatives

The investment world may seem complex, but there are attractive options for all types of savers. If your goal is to generate returns in a period of less than two years, you may want to explore short-term investment alternatives.

In this article we will explain what short-term investments are, what their main characteristics are and we will present a range of options for you to choose the one that best suits your risk profile and financial objectives.

?What"are short-term investments?

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Short-term investments are those with an investment horizon of less than two years. They are characterized by their high liquidity, i.e. the ease with which you can convert your investment into cash. This differentiates them from long-term investments, which are designed for longer periods and where liquidity is usually lower.

Short-term investments are ideal for different purposes, such as saving for an upcoming trip, putting together a down payment on a car or generating a financial cushion for unforeseen events.

Factors to consider when choosing short-term investments

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Choosing the best short-term investment will dependá on several factors that you should consider:

• Your risk tolerance: You should be honest with yourself and assess what level of risk you are willing to take. Investments with higher returns usually involve higher risk of losing part of the invested capital.
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• Investment term: Clearly define the term in which you will need your money. This will allow you to select options that fit your investment horizon.
• Expected return: Determine how much return you expect to get from your investment. Remember that the shorter the term, the lower the return will usually be.
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Short-term investment alternatives

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The following is an overview of the main short-term investment alternatives, classified according to their risk level:

Low risk instruments

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• Interest-bearing savings accounts: Savings accounts offered by banks or financial institutions usually offer a low return, but are highly liquid. They are a good option to save your money without risk and to generate a small profit.
• Fixed-term deposits: Fixed-term deposits allow you to invest your money for a fixed period of time in exchange for a fixed interest rate. The longer the term, the higher the interest rate. They are a safe and predictable option, ideal for defined short terms.
• Treasury Bills: Treasury Bills are short-term (generally less than one year) debt securities issued by the government. They offer a low but safe yield, since they are backed by the government.

Medium-risk instruments

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• Short-term mutual funds: Mutual funds are investment vehicles that pool the money of several investors and manage it in a diversified portfolio. There are short-term investment funds that invest in fixed income and equity assets, offering a potentially higher return than the options mentioned above. You should be well informed about the risk profile of the fund before investing.
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• Bank payables: Bank notes are debt instruments issued by banks on a short-term basis. They offer a somewhat higher return than savings accounts and are relatively safe, as they are guaranteed by the financial institution.

High-risk instruments

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• Crowdlending: Crowdlending is a form of crowdfunding in which you lend money directly to companies or individuals through online platforms. It usually offers an attractive return, but also involves a higher risk of default. You should inform yourself well about the platform and the borrowers before investing.
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• Cryptocurrencies: Cryptocurrencies are decentralized digital assets that have gained popularity in recent years. Investing in cryptocurrencies can generate high returns, but also involves high risk due to their high volatility. Only invest in cryptocurrencies if you understand the risks involved and are willing to assume them.

Remember: This list is not exhaustive and there are other short-term investment alternatives available. Do your research and seek advice from a financial professional before making any decisions

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Conclusión

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Short-term investments can help you reach your financial goals without taking you too far out of your money.

We leave you with some final tips for short-term investing:

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• Infórmate y asesórate: Don't invest blindly. Read, research and learn about the different investment alternatives before making a decision. If you consider it necessary, consult with a professional financial advisor who will guide you according to your profile and objectives.
• Diversify your investment: Don't put all your eggs in one basket. Distribute your capital among different alternatives to minimize risk. Combine low-risk options with higher-return options according to your tolerance.
• Review your investment periodically: Market conditions and your financial needs may change. Track your investment periodically and readjust your strategy if necessary.
• Be patient and disciplined: Investing is a process that requires patience and discipline. Don't get carried away by emotions or seek to get rich quick. Define a short-term investment plan and stick to it
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Start exploring the world of short-term investing and discover how you can grow your money wisely and safely.

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