What are short -term investments?

Short -term investments are any type of investment that is expected to expire or will be liquidated over the next twelve -month period. The assets of this type may include bond problems or even shares that the investor plans to maintain for a period of more than one year before trading in other investment options. In addition, any type of savings account, which is set up for a specific purpose expected to be met next year.

Investors tend to look for short -term investments to provide significant revenue in a short period of time. The issue of bonds is a classic example. With many bond problems, the investor can obtain a higher interest rate for a short -term bond life than would be possible for most savings accounts. After maturity, the investor receives the original investment in a bond plus accumulated interest. This approach is ideal for anyone who is uncomfortabulka with volatile investment opportunities.

Corporations also tend to include short -term investments in their overall investment activities. This is especially true for companies that have a strong cash position. Their investment strategy usually requires a balance between long -term investments and short -term opportunities as a way to generate a constant flow of investment income that matures and brings return in the next year, and investments they ripen later. This process requires a constant overturning of investment when they reach maturity, often using a part of the profits obtained from the business. Short -term investment proceeds can be used to cover income deficiencies or used to finance capital improvement or expansion of business.

Even for occasional investors, savings that are earmarked for a specific purpose can fall into the category of short -term investments. For example, an individual can create a savingsAccount for the purpose of raising funds for the upcoming holiday. Funds are regularly stored on the account and receive a low interest rate for the 12 -month period. At the end of that time, the funds are downloaded and used to pay for leave or leave, a strategy that allows an individual or family to enjoy the time without calling the funds that are usually used to maintain the household. As in many cases, this application of short -term investments allows the investor to achieve the set goal without creating any type of stress or suffering for other financial obligations.