With 2017, there has come about a great deal of change. We saw the beginning of the Trump Administration after the January inauguration. We can expect significant policy and legislative initiatives that will affect investments and the financial world significantly in the future.
If you are looking to park your money somewhere, but want to maintain a fair amount of liquidity as you wait to see how markets adjust to the new administration, here are five great, short-term investments to consider as we continue to see what this year has to offer.
Peer-to-Peer Lending
Peer-to-peer lending, practically a novelty a few years back, has truly become mainstream. P2P companies connect consumers, qualified by level of risk to individual investors. The latter group pools their funds into a single loan, which pays out a proportional amount of interest to the group (minus a modest broker fee the P2P company will typically charge). P2P lending sites allow investors to determine the interest they want to receive, based on the level of risk.
P2P lending sites like Sofi and Lending Club are great places to find a place to invest your money in 2017. Unlike other investments detailed here, these peer-to-peer lending investments carry risk, so consider your options carefully prior to committing.
Certificates of Deposit (CDs)
When it comes to no risk/moderate rewards, it is hard to beat certificates of deposits. CDs allow investors to park their money in a bank for a designated amount of time – anywhere from a month to five years – and reap the benefits of higher interest. Right now, there are some tremendous bargains for CD investors.
Capital One 360 is offering a 1.25% APR on its one-year CDs right now, for example, while a five-year Popular Direct certificate of deposit boasts a 2.05% APR. BE forewarned, however: many CD’s impose a penalty for any early withdrawal of funds.
I Savings Bonds
I savings bonds, available direct from the U.S. Treasury, are another great, short term investment with virtually no risk. Although they have an interest-earning period of up to 30 years, they can be redeemed after 12 months. Investors can purchase from $50 to $10,000 worth of bonds, and the current interest rate on them is 2.76%. Like certificates of deposit, there are also early withdrawal penalties, but their yields on these bonds are relatively high for a no-risk investment.
Money Market Accounts
If you want to keep your cash really liquid, consider a money market account. Money market accounts typically offer higher interest yields than standard savings accounts; some allow check writing as well. While these rates are lower than others, there’s no penalty from drawing money from a market then parking them elsewhere.
A cursory look at top funds reveals some remarkable interest rates for these accounts: Ever Bank’s Yield Pledge fund offers a 1.11% interest rate, while Capital One boasts a 1% rate (on a $10,000 balance).
Pay Off Debt
While investing is great, it does you little good if all you are accomplishing is an offset to heavy credit card debt. And heavy it is: the average American consumer currently holds over $6,270 in credit card debt these days. Striving to pay that debt down over the course of 2022 is as important as any short term investment you might undertake, and in a way is an investment in its own right.
Besides reducing high cash outflows due to interest charges, paying off your debt will improve your credit rating, and free up more of your money in the long term to take advantage of future investment opportunities.
