The challenge of creating a balance between a decent return on investment and being able to get all the funds back in the shortest possible time is one of the factors discouraging people who plan to use their money in the not-so-distant future of the ecosystem. investment.
Since short-term investments often have lower returns than longer-term investments, some potential investors don’t bother to invest at all.
Short term investment
Short-term investments are financial investments that can be easily converted to cash, usually within five years. Many short-term investments are sold or converted to cash after only three to 12 months.
FBN Quest says, “When looking for a place to invest or save money in the short term, your priority should be to get your money back at some point. This is crucial because you often need to have the money at a specific time to meet obligations such as a down payment on a house, wedding expenses, your children’s school fees, or to stay on budget. for a scheduled vacation.
“On the other hand, while you want to keep your money safe, you also want a decent return on your savings. It is unlikely that you will earn as much in a short-term investment as in a long-term financial instrument.
Long term investment
“Long-term investments generally offer better returns, but their prices are more volatile than short-term investments. While the company’s stock price may rise several times over several years, it could decline over the next few months. You may also be faced with the challenge of finding a buyer for the long-term asset that you have purchased. Short-term investments, however, are often very liquid, so you can withdraw them quickly when needed. “
Benefits of short-term investing
He adds: “Appropriate short-term investments are generally characterized by stability of value, liquidity and low transaction costs. These features mean that your money will be safe and accessible when you need to use it, which is an important reason to have a short-term investment. If you are investing money for three years or less, a few principles will help.
Set reasonable expectations, as short-term investments tend to have lower return potential than long-term investments.
Focus more on the safety of your investment than on the return. A little extra return may not be worth the extra risk.
FBNQuest says its money market fund is offered by FBNQuest Asset Management, which is a pool of money collected from many investors to invest in securities such as treasury bills, commercial papers, bankers’ acceptances and certificates of. deposit. It is well suited and adaptable to any type of investor.