Short-term investments are financial strategies employed to help investors reach their financial objectives within a set time frame. Short-term investments can include stocks, bonds, mutual funds, currency, or commodities. Depending on the fund’s definition, the short term can be up to five years. The goal of short-term investments is to maximize return on investment within a given period of time.
One of the most popular short-term investment strategies is the “bucket” strategy. This strategy involves allocating funds into different “buckets” according to the investor’s goals and time frame. For example, an investor may have a short-term bucket for retirement savings and a long-term bucket for college savings. With the remainder of his short-term bucket IRA, he purchases a mutual fund that invests in government debt securities.
Another popular short-term investment strategy is the “plan” strategy. This strategy involves setting goals and making a plan to achieve them. In short, the plan can help you achieve what you want financially. Just the process of defining your goals and putting them down on paper – or on a computer – can help you stay focused.