If you want to invest but do not want to lock your money for a long period, you need to read the article. In this article, we will explore the best short-term investment options that provide great returns!
In the investment world returns are linked to maturity and usually shorter maturity means lower returns. Thus finding short-term investments with good returns is not an easy task but it is not impossible, let’s review the best options with high returns and short maturity.
The peer-to-peer loan marketplace is the best option for short-term investments with returns up to 15% p.a.
Peer-to-peer loan marketplaces like Mintos, Peerberry, Eketit, and so on, are platforms where investors can invest, starting from 10 euros, in loans issued by microfinance companies from around the world and a big part of those loans are so-called payday loans, which usually have maturity 1 or 2 months and issued to private persons with high interests rates.
Thus you could find investment options with maturity few weeks and interest rates of 10-15% p.a. which is awesome.
Such platforms offer many great tools to make investments safer and more convenient. Almost all of them offer a buyback guarantee which is a microfinance company's obligation to buy the loan back from you if the borrower fails to pay the loan back for a defined period of time, usually 60 days. This means your main risk point is not a borrower but a microfinance company which substantially improves risk.
Another great tool is the so-called “auto-invest” which based on your set rules can make automatic investments and reinvest your money after repayment, thus you could set investment rules e.g. maturity no longer than 30 days and rate not less than 14% p.a. thus money will be invested for a period no longer than a month and it will not require daily management.
Remember borrowers might not repay loans on time thus repayment period might be longer or result in partial or full investment loss!
To sum up, you can build an investment portfolio of up to one-month investments with high returns and a great level of automation.
Invoice trading is an investment in businesses for the short-term with great returns
Invoice trading also called factoring is a type of business financing that works like this, let’s say company A produces goods and sells them to company B and issues an invoice with payment due in 30 days. In such a situation, company A has spent money to produce goods, and deliver them but will get money only after 30 days thus they do not have money to buy materials pay workers, and so on. But company A has an invoice which is promise by company B to pay x amount in 30 days. Invoice trading is a process in which company A can sell invoices with a discount e.g. 98% of the invoice amount and receive money immediately, which allows them to start a new production. After 30 days company B will pay investors 100% of the invoice thus investors will make 2% returns in 30 days.
There are several companies that offer such fundraising options to business and retail investors for example Rodger, Investly, SegFinance, 3circlefunding, and so on.
Payment terms might be from 30 days to up to 180 days and more depending on the product and the buyer, typically big buyers demand longer payment days which gives them more flexibility.
Investing on invoice trading platforms investors can make 10% p.a. by investing in the short-term which is awesome compared with euro deposits where for one month you will get 2% p.a.
The industry is well-developed and offers many interesting tools to make investments safer and more convenient. In my opinion, the best tool is insurance that protects investors from buyer non-payment, meaning the investor's main risk is insured and makes invoice trading a much safer investment, but read carefully what type of risks are insured and how much it costs.
Some platforms offer also auto-invest based on investors' set rules to invest and reinvest investors' money automatically, thus improving user experience.
All mentioned makes invoice trading a great investment for people who are looking for short-term investments and great returns and risk-wise this product is better than many long-term investment products.
Short-term investments in real estate-backed loans are possible
Investments in real estate typically are long-term investments since you cannot develop the property and sell it in one or even two years time therefore it is hard to find real estate-backed investments with maturity below 3 years.
Real estate crowdfunding offers such options!
Real estate crowdfunding is a form of fundraising where project owners decide to raise funding not from one or a few big players but from the crowd. In such cases, fundraising is happening via licensed crowdfunding platforms that collect all the data about the project review and evaluate it, prepare and manage all legal and operational aspects, and post-project where many investors can invest small amounts.
Real estate crowdfunding is often used for smaller projects, like rental flat renovation, or is used to gain funding to finish the project, and in such cases, it is possible to find a project with maturity below 12 months and with relatively high returns up to 12% which great for a real estate backed loans.
You can find a list of European Real estate crowdfunding platforms on crowdinform.com.
Investment maturity has a large impact on risk, therefore even if you are ready to lock capital for a longer period it is good to keep some part in the short-term to have the ability to terminate investments and withdraw fast, especially given the are tools that allow you to maintain short-term portfolio “automatically”.
Remember investing is always subject to the risk of partial or full investment loss, therefore do not invest more than you can afford to lose.
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We wish you a good day and successful investing!
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