PROFITING FROM SHORT TERM INVESTMENTS

Profiting from short term investments is a question of how involved the investor wants to be in the decision making process.

There are a number of advantages to investing short term with the most important being that profits or losses can be observed almost immediately. Also short term investments don’t lock up your money for very long and if you see that an investment is not doing well you don’t need to wait too long before you can reinvest elsewhere.

Profiting from Short Term Investments:

Short-term investments typically are about investments with more prospects for big profits, but also potential for additional risk. The assets that can be invested in short term investments are options, forex, futures, commodities and stocks. Sometimes realized profits for these investments reach double digit proportions per day! Alas, if you are not careful losses can be that high also. However, there are ‘safe’ or less risky short term investments such as money market funds or treasury bonds which do not offer a big return and are for the conservative investor.

To profit from a short term investment you must decide which time frame you are comfortable with. For example investments in the currency markets might be for a length of several hours or even one day especially if you intend to day trade.

Other types of short term investments such as options, futures, or stocks may last a few days or a few weeks. Investments such as bonds or treasury notes may have a short term horizon of several months. In general the shorter the time period the more involved in the investment you need to be to profit more successfully from it.

You should decide the risk level you feel comfortable with before you decide to invest your money. If you are investing money that you can’t afford to lose don’t invest in the high risk investments such as currencies, stocks or commodities, options and futures. You might have a chance to make a killing but you are just as likely to make a big loss. You should be looking at investing in low risk assets such as CD’s, treasury notes and short term bonds. 

If your investment money is spare cash and not earmarked for anything in the future then you are free to choose a higher risk investment and an asset class that can give you a higher return on your investment.

Short term investments require a lot of on-going decisions and also need more knowledge of markets as well as more than passing knowledge of fundamental and technical analysis, especially assets such as currencies, stocks and commodities. Either you learn and acquire the right knowledge or you get advice from a qualified investment advisor.

However, short term low risk investments such as money market instruments or bonds which are held until they mature don’t require a lot of study and skill as your profits can be estimated in advance and you can choose the return on investment you desire from the options you have.

To profit from short term investments you need to decide whether high risk, high return, short term investments suit you or whether you are more comfortable with short term low risk, low return safe investments.