Best Way to Invest Money Short Term in 2025

best way to invest money short term in 2025

Before saving your hard earned money for a goal within the next few years [ you can say such goals as short term goals ], investors must select an investment strategy that stands between risk and reward. 

In general people who are willing to invest short term investments look for a plan that gives good returns and at the same time they  also need their money protected with easy access to spending. So in simple words, in Short term investments stability along with liquidity is the main priority. Whereas long term investments may have some liquidity issues and there is no guarantee that your asset value won’t come down in the next few years.

Short term investments enable you to protect your capital safety from market volatility even  in unexpected events like “Covid” pandemic. Moreover  you can earn interest from your investment. 

Lets see the best investment options  for the short term in 2025.

Best way to invest money short term in 2025

High Yield Savings Account

 A high-yield savings account proves to be an intelligent financial decision  if you are looking for high returns with a short term investment plan.

The high-yield savings account serves as a superior option than keeping money in checking accounts that typically generate minimal or no interest. The regular add-on of interest in high-yield savings accounts makes your funds grow steadily while maintaining easy access to your savings.  

Not only the high-yield savings accounts deliver better interest rates than traditional savings accounts but they are also insured through FDIC for banks and NCUA for credit unions. So you need not to worry about the money in your savings account.

Another feature about “High Yield Savings Account” is that it is easy to access their money for primary bank transfers. So there is no issue of liquidity..  

This type of account represents an excellent solution for storing short-term funds with low risks and modest earnings potential.  

 High-yield savings accounts  are tailor made  for risk-averse individuals along with users who must access their money quickly while avoiding market volatility. The protection your money receives from these accounts comes at the expense of limited inflation adjustment over time. So these types of Savings accounts are  suitable for temporary savings but not suitable for long investment periods.  

Certificates of Deposit (CDs): 

Banks together with credit unions provide customers the time-bound savings instrument known as Certificate of Deposit (CD). The amount you invest in CDs becomes inaccessible for a predefined  period and in exchange they offer you a rate of interest that remains unchanged during this locked-in time. CDs are highly secured short-term investments as they are insured by FDIC or NCUA for each depositor at every bank.  

By investing in CDs you can expect a fixed interest rate during the entire term. These interest rates typically exceed the ones you are getting from your regular savings account.

The typical maturity duration of CDs are 3 months, six months, one year, two years and five years.Financial experts recommend this investment strategy for Short Term purpose only.

If you want to withdraw the amount before the lock-in period then you may have to pay a penalty. If you are looking for an investment with inflation-beating returns, stay away from CDs.

This CDs investment option appeals to investors who need funds for upcoming commitments such as buying a house or making large purchases. 

For a section of people who want stable returns and peace of mind from their savings without having immediate Access to Funds , Certificates of Deposit is the best option.

Corporate Bonds 

Generally Big Companies look at “Corporate Bond” as an option to raise funds for their business expansion or for day to day operational needs.

If you are investing your funds in corporate bonds, then literally you are providing a loan to them, for which they will pay interest on a regular basis, may be monthly or quarterly etc depending on their policies. So “Corporate Bonds” have become a lucrative investment option for people who are looking for regular income from their investments through passive mode.

Corporate bonds are an ideal solution for people who are expecting  predictable and decent returns from their investment portfolio.

Compared to other financial instruments , investing in  “Corporate bonds” is easy and very low risk. Because of their lower market risk, corporate bonds are suitable as investments for people who avoid financial risks. 

People usually invest in short-term corporate bonds between one and five years 9 of maturity. As you are looking for short term returns on your investment, it is recommended to invest in 1 year or 5 year Corporate bonds.  

Apart from getting monthly payments [ through interest], Corporate Bonds have very high Liquidity. You can buy or sell them on any day [ Only when the markets are open].

Corporate bonds are not 100% risk free like “CDs”.Corporate bonds do not carry insurance protections from the government which means a slight possibility exists that investors can lose money if the issuing company defaults on payments. 

Treasury Bills ;

Another short term low risk investing option is putting your money in Treasury bills [ T-bills ]. If you are not sure about what exactly are treasury bills ? then here is the answer for you guys.

Treasury bills are simply a form of short-term investment issued by the U.S. government. You can treat Treasury bills this way i.e. a loan you give to the government and in return you will get profit along with your capital.

These investments last for a very short time i.e. anywhere from a few weeks to a year. As these TBills are backed or insured by the Government, they are the safest bet to invest your money for short term.

Another interesting feature about the “Treasury bills ” investing option is , it is flexible. Its in your hands to choose the time period you want to invest i.e. may be a week or month or two months etc. And moreover liquidating the Tbill before the maturity date is also possible, so you need not to wait till the investing period ends.

If you need your money before the term ends, you can simply sell your Tbill in the market, making it a great option for those who want easy access to their cash. 

Have you heard a saying in the finance world “Low Risk, Low Returns”, “High Risk, High Returns”. Of Course this saying is not related to every financial instrument. In case of “TBills” the saying works absolutely great.

As we already discussed, T-bills are very safe [ low risky], so don’t expect high returns from “Treasury bills” like stocks or corporate bonds. However, they are a good choice for people who want to keep their money secure while still earning a little extra.