[kkstarratings]If you’re looking to make some money on the side via the online investment space, then you’ll be pleased to know that there are hundreds of different asset classes to choose from. But how do you know which assets to invest in?
In our best short-term investments guide, we’ll show you everything you need to know about quick growth investments. Our list of recommendations will cover financial instruments from a range of different short-term investment fields, including the likes of forex, stocks and shares, ETFs and commodities.
By the end of reading our guide from start to finish, you’ll be equipped with all of the necessary tools to get your short-term investment journey going.
What is a Short-Term Investment?
Before we delve in to our best investments for 2019, let’s quickly explore what a short-term investment actually is.
Regardless of whether you are looking to invest on a short-term or long-term basis, the overarching aim is to make more money than what you started with. This could be for a number of different reasons, however this mainly boils down to wealth preservation or increasing the size of the assets.
Although often understated, wealth preservation is a crucial mechanism, especially when one considers the effects of prolonged low-interest rates and inflation. In other words, by simply leaving your money in a traditional bank account, your fighting a constant battle with inflation.
For example, if a savings account at a retail bank pays 0.5% in interest, but inflation for the year stands at 3%, then effectively, your money is worth 2.5% in the real-world world. As such, investing your money in the financial markets can be a great way to counter this reduction in purchasing power.
When it comes to short-term investing, this is generally referred to the process of holding an asset, or group of assets, for less than 1 year. Anything longer than this and you’ll be stepping into the boundaries of long-term investing.
The key point to make here is that essentially, the types of assets that constitute both short-term and long-term investing are virtually the same. Even the likes of bonds, which are seen as a very long-term asset class, can be classed as short-term investing, as they can be traded at any time of the open marketplace.
Ultimately, the short-term investment arena can is so broad so that it cover anything from a forex trader that holds a currency pairing for a coupe of minutes, to a oil ETF that spans 12 months. Which ever financial instrument you do decide to invest in, the fundamental aim to make regular profits on a short-term basis.
So now that you have a good understanding of what short-term investing actually is, we are now going to discuss 15 of the best short-term investments to look out for in 2019.
15 Short-Term Investments to Look out for in 2019
First and foremost, we should note that the follow 15 short-term investments focus on the underlying asset class — such as the commodity, industry or particular stock market. This will subsequently allow you to make an informed decision as to whether the type of asset meets your individual investment needs. This will cover key factors such as the projected risk levels, potential returns, and the amount of time and effort required to execute each trade.
Top Investment Strategies
If you’re looking to get your short-term investing journey off on the right foot, then it is important to implement the right strategies. In doing so, you’ll be able to give yourself the best chance possible of making protecting your wealth. Here’s 10 tips to get you on your way.
Technical chart analysis
If you’re looking to trade on a short-term basis, it is crucial that you gain an understanding as to how trading charts work. This is the most important toolkit for successful traders, as it allows them to analyse historical pricing trends.Moreover, technical analysis also allows investors to look at other key metrics such as trading volumes outstanding orders. If you don’t have any knowledge of trading charts, spend some time learning how they work.
2. Time Commitment
Unlike long-term investing, which is passive in nature, short-term investing requires a certain amount of time commitment. You’ll likely be placing a lot more trades in the short-term trading sphere, which will require surplus research commitments.If you want to be a full-time trader, then this is fine. However, if you’re only looking to trade part-time, make sure you have the time to keep an eye on the markets in the event of a potential down-fall.
3. Set Stop-Losses
Stop-losses are absolutely fundamental when engaging in the short-term investments space. As you’ll likely want to be making quick, regular profits, your exposure is going to be a tad higher in comparison to long-term investing.The key defence to this is to ensure that install suitable stop-losses on your trades. This will protect you in the event that the markets go against you.
4. Start With Small Amounts
We can’t stress enough how important it is to start your short-term investment journey with small amounts. Although a lot of brokers now offer live demo accounts, these are limited in the sense that you won’t get a feel for the emotional side of trading.Therefore, your best bet is to start off with small amounts. Once you begin to get comfortable, this is the point that you might consider trading higher volumes.
5. Keep an eye on Fees
A lot of traders within the short-term investment space are known to place a high volume of individual trades. In fact, this is recommended, as it’ll allow you to diversify your risk.However, this can prove to be costly if you are not using a broker that is kind to high-frequency traders. As such, you’ll likely want to choose a broker that charges a variable percentage fee, rather than a flat fee. Even better, use a broker that is commission-fee!
6. Overnight Costs
When trading certain securities such as CFDs, you need to ensure that you choose a broker that offers highly competitive overnight costs. You’ll likely pay for this even if you aren’t utilizing leverage, so do bare this in mind.This point is especially pertinent if you are looking to hold on to an asset for months, rather days. If this is the case, then you’re better off staying away from CFDs and instead investing in traditional assets such as stocks and shares or bonds.
Leverage is a financial tool that demands the utmost of respect. Used wisely, and it can turn a good trade into a trade of astronomical profits. Used incorrectly, and you could wipe your entire balance out.If you are just starting your short-term investments career, then it’s probably best to leave leverage alone. Once you’ve built up a notable trading history, and you have a full understanding of the risks only then consider dabbling with leverage.
8. Don’t Lose the Emotional Battle
One of the biggest weaknesses for newbie short-term traders is that they can’t handle the emotional effects of losing. This is often seen when the markets go against a trader, whereby rather than offloading a trade with a small loss, they hold on in the belief that the price will eventually recover.This is a strategy that will only get you burnt in the long-run. Ultimately, learn that short-term investing is just as much about the losses as it is the winners.
9. Set Targets
Setting yourself some realistic targets is a very important strategy to implement, especially when you’re first starting out. This could be a monetary target such as 1% a day, or a stock-specific target such as when its underlying value reaches a certain price.Targets will keep you on the steady track and ensure that you have a full grasp of how you are performing,
10. Research, Research and Research
This final point is of utmost importance, not least because you need to understand the correlation between real-world events and the price of an asset. As we mentioned earlier, commodities such as Gold, oil and soy beans rely heavily on external forces such as supply and demand, regulation and even trade embargoes.If you’re not accustomed to key market events, then you’re going to end up on the wrong side of the market.
Best Short-Term Investment Platforms
If you’re looking for the best online platforms that are conducive for short-term investing, we’ve listed 4 that we think you should consider further.
If you've read our guide from start to finish, you should now have a good idea as to some of the best short-term investments in 2019. Whether you're interested in low-risk assets such as bond, or high-risk assets such as cryptocurrencies, we've listed something to suit most appetites.
The key thing that you need to remember about short-term investments is that it not only requires more of your time in comparison to long-term investments, but you also need to be more active with your research.
On the contrary, long-term investors operate in a more passive manner, not least because they are happy to ride out market corrections. You won't be as fortunate with short-term investments, as you'll need to be at the ready if the market moves against you.
Ultimately, by following the top 10 strategies that we listed in our guide, you'll be well on your way to getting your short-term investments journey off on the right foot.
How are short-term investments defined?
For an investment to be classed as short-term, the asset generally needs to held for no longer than 1 year. Anything longer would be defined as a long-term investment.
How much time do I need to commit to short-term investments?
While there is no hard and fast rule, short-term investing requires considerably more time than its long-term counterpart. Ultimately, as you are attempting to make smaller, but more frequent profits, you'll need to be a lot more active.
What is the best way to invest short-term assets?
If your overarching aim is to invest on a short-term basis and thus, buy and sell on a more frequent basis, then you might be best sticking with CFDs. The reason for this is that trading fees are significantly lower in comparison to traditional brokers, who usually charge a flat fee for each trade you make.
What types of short-term investments are low risk?
Although all asset classes carry their own risk levels, bonds are potentially one of the safest assets to back. This is especially true if you are purchasing government bonds from strong economies such as the U.S.
How can I mitigate my risks when trading short-term investments?
In order to keep your risk levels to a minimum, you should also installs stop-losses on all of your trades. Moreover, it is wise to invest in multiple industries to ensure that you don't put all of your eggs into one basket.
Is short-term investing the same as day trading?
As day trading usually refers to the act of holding assets for no longer than a day, then this most certainly falls within the bracket of short-term investing.
How much money do I need to risk for short-term investing?
The amount of money you need to get started with your short-term investment endeavours is completely up to you. In fact, it's always best to stat with smaller amount. Most brokers install minimum deposit amounts, although the likes of Plus500 allow you get started with an investment of just $200.