Investments, including short-term investments, can be one of the best options for those who save or want additional income.

In terms of time, there are actually three types of investment, namely short-term, medium-term, and long-term. However, usually what is often referred to are short-term and long-term investments.

For those of you who want to enter the world of investment as an investor, of course, you must first understand the risk profile and the type of investment chosen.

The goal of all of that is so that the investment made is profitable and not vice versa.

So, what exactly is the definition of short-term investment and its types and benefits? Here is the review.

Short Term Investment

In general, the definition of short-term investment is a type of investment with a period of three to twelve (3-12) months. Even though the duration is quite short, this type of investment carries a small risk.

In addition, investors who invest in the short term also have the convenience of withdrawing assets compared to long-term investments. It is not surprising then that of these two types of investment, many people will prefer the short-term type of investment.

This is because long-term investment is the type of investment that will drain a lot of power and energy because it must be carried out continuously. In addition, this type of investment can only be disbursed when the maturity period or at least one year.

In another sense, this long-term investment can be referred to as an investment effort or wealth from a person/company to obtain a steady income.

Short Term Investment Goals

As mentioned above, this type of investment with a short term will have a much smaller risk than a long term investment.

Well, it can be traced from the purpose of this type of investment. The explanation is as follows.

1. Distribute cash flow wisely

The first objective or in general of this type of investment is an effort to maintain cash flow stability. This will help investors to channel the excess funds in their finances so that they can be stored in short-term investments.

If you do this regularly, then, as an investor, you can maintain financial health and avoid the act of wasting money for unclear interests.

2. Get passive income

As discussed earlier, this type of investment has a maximum maturity of one year. Well, if you as an investor do not take the saved funds, the final amount obtained will later increase.

The reason is the change in interest rates on the type of instrument chosen to invest so that you will indirectly have additional income (passive income).

3. Additional working capital

In addition to being able to benefit from the return at the end of the investment duration, you can also take this investment fund at a time.

The reason is, even though there is a duration during this investment period, but if you need additional business capital, you can withdraw the invested funds.

This can happen because there is no provision regarding the time for disbursement of funds. Uniquely, there are also no penalties/sanctions for investors for this.

Short Term Investment Benefits

After knowing the purpose, now is the time for you to understand what are the advantages of this type of investment for investors. Here is the review.

1. Withdrawal Time Anytime

Given that the time period for this type of investment is usually one year, you will be able to decide for yourself when to invest.

In this case, there are a number of these investments that can be withdrawn at any time without a certain duration. However, the thing that must be considered here is the main reason you make a withdrawal of funds. Even so, you don’t need to worry because here there are no monetary penalties or sanctions.

2. Fast Profit and Low Risk

A wide selection of instruments from this type of investment will offer different percentages of profit. With that short period of time, you can invest with the existing profit percentage.

Of course, it can give you an advantage without having to wait too long. In addition, the risk of loss from this type of investment is lower than that of long-term investments.

3. Safe Short Term Investment for Beginners

Furthermore, this type of investment is also safe for beginners aka those who have never invested at all. Therefore, with fast profits, low risk of loss, and proper analysis, you can start investing with a choice of instruments in this one investment.

Types of Short Term Investment

In short-term investments, there are several instruments or types of investments that can be tried. However, you still need to pay attention to several things related to this type of investment, including the main goals, needs, abilities, and you also need to try asking someone who is an expert in this field for advice.

Well, here are some examples to choose from.

1. Reksadana

Reksadana are investment products managed by investment finance managers who obtain funds from investors. Related to this, the investment manager will manage the funds until they finally get a profit. Currently, there are also a number of trusted applications that can be chosen to buy mutual funds as an investment.

2. Deposito

Deposito are time deposits with a specified duration. It is important to understand that if you deposit funds in a bank deposit, you cannot withdraw the funds until the due date arrives. The advantage of this one investment is the offer of a fairly high interest rate every month so that it will certainly provide benefits.

3. Fintech Peer to Peer (P2P) Lending

Peer to peer Lending or P2P is a capital lending activity between investors and borrowers. P2P Lending is also quite popular nowadays.

P2P Lending is a means for investors to invest in several borrowers who are in need of funding. In this case, you can choose the official P2P lending program in a variety of service options that have been licensed by the “Otoritas Jasa Keuangan” (OJK).

4. Stocks

Stocks are a very popular type of short term investment all over the world. Shares are securities as proof of ownership of an asset. Although famous for long-term investments, there are also types of stocks with short periods. This short-term stock uses a trading system.

The benefits of this trading can even be obtained in just a matter of hours. Even so, you are still required to be an expert and be able to manage with the right strategy in order to make a profit.

Short Term Investment for Beginners

For novice investors, there are several short-term investment options that are suitable to try. First, you can try mutual fund investments. This type of investment will be perfect for those of you who don’t want to bother determining a strategy to make a profit.

You can choose the choice of investment instrument in the type with a short period of time, namely money market mutual funds. The reason is, the duration of this mutual fund is only one year and has a promising interest rate offer.

The next option is deposit. With this investment instrument, you don’t need to worry because your money will be guaranteed with insurance from the bank of choice. As a short-term investment, you can choose deposits with durations ranging from 3, 6, up to 12 months.

Next, you can also choose to invest in P2P Lending. With this type of investment, you don’t have to worry about capital turnover. In addition, the benefits offered by this investment are also quite large.

Finally, you can try to invest in stocks. By using a trading system for short-term stocks, you can make profits in just a few hours. Check out other latest articles about the world of digital assets only at Indodax Academy.