What is a short -term investment?

Short -term investment is an investment to be held for one year or less. Such investments are used as part of a mixed investment strategy that is designed to balance and spread the risks. Profits can be realized by evaluating the investment or through dividends and other payouts. Careful research can be carried out to decide on investment decisions and people can also get advice from advisors and brokers unless they feel comfortable to choose for themselves. Investments can be low or high risk, depending on their nature and often holding corporations that want to invest capital in highly liquid investments. If necessary, a short -term investment may be disposed of for rapid access to funds, but otherwise the company plans to achieve a quick profit to create more capital that can be used for further investments or other purposes. The investor will not decide to take a long position. These investments are also highly liquid and can appreciate and generationat dividends, if they are held. At the end of the period for possession of a short -term investment, it may be sold or reassessment can determine that it should be maintained longer. In both cases, the performance with short -term investments is usually above the scale, which provides motivation to hold an investment.

Some types of funds can work primarily with short -term investments. Short -term investment funds (STIFS) concentrate capital in investments held in a short period of time. The fund manager chooses low -risk investments to ensure the basic level of return that will fall above the benchmark rate. Common choices for these funds include government securities because these investments have guaranteed revenues and are supported by full faith and government loan.

People with mixed investment strategy can use short -term investments to provide a source of liquidity and rapid returns that will maintain a long positionICE in investments that pay off in more than a year. This is designed to ensure that long -term investments do not have to be sold with a loss if someone desperately needs capital or suddenly shift on the market. In addition to mixing short and long -term investment, investors also mix their purchase decisions by type to gain wide spread, reducing the risk of losses if part of the market decreases.