What Is a Short-Term Investment? Benefits & How to Do It

By Lyle Daly – Updated Jan 31, 2025 at 2:28 PM

Key Points

Short-term investments can last anywhere from a few weeks to five years.
Common short-term investment options include high-yield savings accounts, CDs, and Treasury bills.
These investments provide stability, a reasonable yield, and high liquidity.

While investing is often a a long-term endeavor, sometimes people need short-term investments. You still want to grow your money, but you don’t have as much time to leave it invested, so you can’t rely on the same types of assets. Fortunately, there are plenty of short-term investment options that offer competitive returns without the volatility of the stock market.

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Blocks spelling the word Term with the first block having sides that say both Short and Long. — Image source: Getty Images.

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What is a short-term investment?

A short-term investment is one the investor intends to hold for no longer than three to five years. On the low end, a short-term investment could last for just a few weeks. Because the investor will need the money in the near future, short-term investments must be low risk and highly liquid. Yields on short-term investments tend to be much lower than those on long-term investments.

Some of the most common types of short-term investments include:

High-yield savings accounts
Certificates of deposit (CDs)
Money market accounts
Treasury bills (T-bills) and Treasury notes (T-notes)
Corporate bonds
Municipal bonds

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About the Author

Lyle Daly is a contributing Motley Fool stock market analyst covering information technology and cryptocurrency. Lyle has been a contributor at the financial services company since 2018. His work has been featured on USA Today, Yahoo Finance, MSN, Fox Business, and Nasdaq. Before joining The Motley Fool, he wrote for financial brands including Intuit.

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