15 Short-Term Investments : Best Quick Growth Opportunities for 2020

1. Cryptocurrencies

Cryptocurrencies took the world by storm in late 2017, with the value of Bitcoin reaching a remarkable $20,000 by the end of the end of the year. Started the year at just $1,000, this represented a 12 month increase of 2,000%. However, even more astonishingly, had you invested in Bitcoin when the digital currency was first launched in 2009, you would have paid just a fraction of a cent.

Since it’s all-time high of $20,000 in late 2017, the markets have been somewhat bearish. At the time of writing in March 2019, Bitcoin is hovering around the $4,000 mark, illustrating a loss of around 80%. As such, had you jumped on the Bitcoin bandwagon at the turn of 2018, you’d certainly be sitting on a significant loss. However, as with all financial marketplaces, investing in Bitcoin and other cryptocurrencies while the industry is stagnant could be an excellent trading opportunity.

Moreover, as perhaps more importantly, if you invest in cryptocurrencies via a CFD (Contract-for-Difference) broker such as Plus500, you also have the opportunity to ‘Go Short’. This means that of you think cryptocurrencies will continue to decline int he short-term, then your investment can reflect in the form of a CFD.

I terms of risk levels, cryptocurrency trading is one of the more speculative marketplaces in the investment arena. One of the key reasons for this is that volatility levels, although somewhat lower than their early days, are still super high.

As such, it’s not unusual for the value of cryptocurrencies to go up or down by more than 10% in a 24 hour period. On the other hand, if you like the sounds of short-term trading in the cryptocurrency space, this can actually go in your favor.

Ultimately, if you are looking to trade cryptocurrencies on a short-term basis, then it might be wise to mitigate your risk by buying multiple coins or tokens.

2. Forex Trading

Forex trading refers to the trading of currencies such as the USD, GBP or EUR. To illustrate just how lucrative the forex industry is, some estimates put daily trading volumes at a whipping $5 trillion.

The vast majority of this figure is dominated by the inter-bank sector, which involves financial institutions trading currencies with one another. However, outside of the financial institutional space is a retail investment space that allows everyday investors to trade forex at the click of a button via their desktop or mobile device.

The way forex trading works is an investor will trade a specific currency pair such as GBP/USD. These pairings are mainly divided by three main levels, notably major pairs, minor pairs and exotic pairs.

In a nutshell, a major pair covers the trading of two major currencies, with at least of the currencies being the USD. Minor pairs also cover two major currencies, however there is no requirement for the USD to constitute one-side of pair. Finally, exotic pairs are made up of one major currency such as the EUR, and a currency from a less dominate economy such as the Turkish Lira.

Forex trading is ideal for short-term investing, not least because the retail markets operate 24/7, volatility levels of ultra-low (apart from exotic pairs), liquidity levels are super high, and traders have dozens of currencies to choose from.

One of the best ways to trade forex on a short-term basis is to use a CFD broker such as Plus500, not least because you have the option of trading more than 47 different pairs. Moreover, as the fees associated with CFDs are low, they’ll also suitable for trading smaller amounts.

3. Futures

Futures are one of the most under-rated short-term investments as there seems to be a general consensus that the marketplace is only suitable for the institutional space. This couldn’t be further from the truth, as the vast majority of leading online brokers have a dedicated futures department that can be accessed by traders of all sizes.

For those unaware, futures are financial contracts that allow investors to speculate on the future price of a particular asset, or group of assets. In fact, futures contracts can be purchased within virtually every segment of the financial arena, such as currencies, commodities and interest rates.

Each futures contract will have an expiry date, which is usually set at 3 months. However, the important point to note here is that most assets, futures contracts can be traded on the open marketplace. As such, there is no requirement to hold on to a futures contract until its expiry date.

A further benefit to futures is that you can speculate on the value of the underlying asset going up in value, as well as down. The future price of the asset is determined by the exchange that lists it, meaning you need to determine whether you think the asset will rise or fall in the short-term.

Let’s say for example a 3 month futures contract on oil is set at $60 per barrel, with the current market price at $50. If you think the value of oil will surpass $60 in three 3 time, you’d go long. If the price of oil rises to $70 at the point of expiry, then you would make $10 profit for each futures contract you held.

Alternatively, if  the value of oil hit $70 just 1 month in to the futures contract, you could sell the contracts on the open marketplace and thus, take an early short-term profit.

4. Bonds

There is often a misconception that bonds are only suitable for long-term investments. While it is true that bonds are a notable asset class for those look for long-term steady gains, not least because expiry terms can surpass 1, 5, 10, 25 and even 100 years, shorter terms are also available.

In the vast majority of cases, the shortest bond term you can obtain is 1 year, which just about falls within the remit of short-term investing. However, don’t forget that like most of the asset classes we are discussing in our guide, you can trade bonds on the open marketplaces at any point in time.

If you’re unsure as to how bonds actually work, they are essentially loans made to governments or major corporations. These loans are so large that no single institution could cover them in their entirety and thus, multiple loans are made in the form of bonds.

In return for lending their money, bond holders receive regular, fixed interest payments for the duration of the term. Once the bond expires, the bond holder will receive their initial investment back in a single lump sum.

When you invest in bonds on  short-term basis, you have the choice of investing in government bonds or corporate bonds. Moreover, depending on who you are lending the money to, risk levels will vary. The higher the risk levels, the higher the interest yields.

If you’re looking for higher returns, then a good short-term investment strategy is to purchase bonds from governments with weaker economies. This could includes the likes of Argentina, Kuwait or Kenya. If you instead have an appetite for ultra-low risk levels, then you should instead consider bonds from the likes of the U.S. Treasury, Japan or Germany.

Don’t forget, you can still purchase bonds with expiry terms that exceed 1 year and still perform short-term investments, as you can trade the bonds via a regulated exchange.

5. ETFs

Exchange Traded Funds (ETFs) are financial instruments that track a specific asset, a group of assets, or an entire marketplace such as the New York Stock Exchange. The great thing about short-term ETF investment’s is that they can be utilized to speculate on a financial asset that would otherwise be difficult to invest in as an everyday consumer.

Let’s take the real estate industry for example, If you wanted to speculate on the value of the U.S. real estate industry increasing over the next 3 months, it would b virtually impossible to achieve this without physically purchasing a property out-right, and then flipping it.

However, via an ETF, you can speculate on a specific housing market witout ever needing to purchase a property. One such example of this is the iShares U.S. Real Estate ETF. This particular ETF trcks companies of all sizes that operate in the U.S. real estate space. Each of these companies usually trade on the New York Stock Exchange, making it super easy to track their prices.

Just like in the case of futures contracts, ETFs allow you to speculate on the price of the asset going up in value, as well as down. As such, if you felt that a particular marketplace was due a short-term correction within the next month or two, then an ETF investment can facilitate this.

In terms of risk levels, this will ultimately depend on the financial market that you are backing. For example, if you are look to engage in short-term investments on U.S. Treasury bonds, then the risks are super low. On the contrary, backing an ETF that tracks emerging currency markets such as those based in Africa or South Africa, then risk levels will significantly higher.

6. Indices

Indices, also sometimes referred to as indexes, are financial instruments that track the performance of stock markets such as the NASDAQ, London Stock Exchange or New York Stock Exchange.

The main concept behind short-term indices investments is that you are diversifying your risk levels by backing multiple companies, rather than cherry picking one or two yourself.

Moreover, it is also important to note that stock market indices will be made up of companies operating in a multiple industries. As such, even if a particular industry such as retail was going through turbulent times, the effects of this would not be too fundamental for the indices in question if the remainder of the indices was performing well.

One of the most popular indices available is that of the NASDAQ 100. As the name suggests, the NASDAQ 100 tracks the performance of the largest 100 companies that are listed on the NASDAQ stock exchange. The NASDAQ 100 indices gives extra preference to the largest companies in terms of market capitalization and thus, the likes of IBM, Facebook, Microsoft and Apple play a major role in the direction that the indices takes.

If you’re looking to trade indices on a short-term basis, then you’re in luck. The reason for this is that you have the option of backing an indices in the form of an ETF. As such, not only can you buy and sell your chosen asset class on the open marketplace, but you can go short.

On the other hand, you can also place short-term indices investments in the form of CFDs. This gives you an excellent opportunity to speculate on the rise and fall of the wider stock markets in a user-friendly and cost effective manner.

7. Gold

Often referred to as the oldest form of money, Gold is a commodity that will always have a role to play. Its fundamental characteristic is that in the event of turbulent financial conditions, Gold is viewed as safe, secure and highly notable store of value. However, it terms of its real-world value, the price of Gold fluctuates quite widely in the open marketplace. In fact, although it is viewed as a store of value, Gold prices are at times somewhat volatile.

In reality, this makes Gold an excellent choice for short-term trading, not least because you have the opportunity to trade it on a daily, weekly, or even monthly basis. In fact, with the presence of ETFs and CFDs, some short-term investors even trade Gold on a minute-by-minute basis.

In terms of where Gold sits against the USD, at the time of writing in March 2019 it is hovering around the $1,284 mark. Analysts at Goldman Sachs are very bullish on the potential for Gold in 2019, forecasting a protected target of $1,425. This positive sentiment towards 2019 Gold prices is also shared by the World Gold Council, who argue that a potential slowdown in global growth levels may go in Gold’s favor.

This correlation between financial market instability and the value of Gold is of utmost importance, as history suggests that as markets begin slow, demand for Gold increases. As such, if you are looking to trade Gold on a short term basis, then you will be required to perform in-depth research on GDP growth levels.

Ultimately, regardless of whether you decide to invest in Gold via an ETF or CFD, liquidity levels are super high, meaning you’ll be accustomed to tight spreads and no issues surrounding your ability to exit your trade.

8. Oil

Following on from Gold, an additional commodity that is ultra popular in the short-term investment space is that of oil. This particular asset class is also accustomed to volatility levels that make it an ideal instrument for short-term investing. Moreover, just like in the case of Gold, oil prices are determined by macro economic events and thus, traders should spend the required time understanding what factors can effect a sudden price movement.

In the grand scheme of things, oil prices are dominated by the supply vs demand phenomena, meaning that as global demand increases, as does its price. On the other hand, when supply levels exceed demand, the value of oil decreases.

However, oil prices are a lot more complex than this, as demand and supply levels are artificially controlled by the major players. In this respect we are referring to the likes of OPEC (Organization of the Petroleum Exporting Countries). Although OPEC is mainly made of up several Middle Eastern nations, the general consensus is that Saudi Arabia dictates production levels.

For example, when the U.S. lifted its sanctions with Iran in 2015, subsequently allowing the nation to re-access the global oil markets, Iran once again became a major competitor for Saudi Arabia with respect to supply levels. In order to counter this potential threat, Saudi Arabia increased its production levels with the view of reducing reducing oil prices to a level that no longer made Iran profitable.

For example, it was recently reported that Saudi Arabia were limiting its supply of oil to the United States with the view of boosting prices. On the other hand, as was seen in 2015 when sanctions were lifted on Iran, Saudi Arabia instead increased its supply with the view of reducing oil prices to the point that production was no longer viable to Iran.

All in, while oil trading is a great mechanism for short-term investments, you will need to ensure that you spend the required time researching macro-economic trends.

9. Blue-Chip Stocks

One of the most popular short-term investments utilized by traders is that of the stocks and shares space. This covers major markets such as the NASDAQ, New York Stock Exchange and the Japanese Stock Exchange.

Although investing in blue-chip stocks is a very common strategy used by long-term investors, not least because of the potential of receiving periodic dividends, the arena is also perfect for short-term investments.

If this is a short-term investment arena that you want to explore further, then you’ll need to remember that you might not be accustomed to dividends as you are only holding on the the stocks for short periods of time. This shouldn’t really present any issues because your overarching aim should be to obtain short-term appreciation gains.

While traditional brokers are best suited for long-term equity investments , the short-term side of the industry is potentially more suited for CFD brokers. The reason for this is that the costs associated with CFD stocks are considerably lower than that of traditional brokers. As such, you won’t be penalized for performing regular trades.

Not only this, but CFD brokers such as Plus500 also permit shorting, meaning you can speculate on the company in question losing value on the open marketplace.

Short-term investing in blue-chip stocks will require knowledge of technical chart analysis, as well as constant research of fundamental developments.

In terms of where the markets are likely to go in 2019, tech stocks have experienced an excellent start to the year.

For example, the NASDAQ — which lists some of the largest technology companies in the world such as Facebook, Apple, IBM and Microsoft, is already up 15% as per mid-March. More specially, Facebook and Apple are up 25% and 21% respectively thus far, illustrating that investors are once again ultra-bullish on key tech leaders.

As such, if you feel that the sector is likely to continue is 2019 form, then a short-term investment might be a notable choice for your stocks and shares portfolio.

10. Penny Stocks

If your appetite levels for risk are ultra-high, then you might want to consider short-term penny stock trading. For those unaware, penny stocks are small public companies that have a share price of $5 or less.  One of the major characteristics of penny stocks is that they do not trade on traditional stock exchanges. On the contrary, you’ll likely need access to the OTC (Over-the-Counter) space in order to execute your trades,

However, there are a number of platforms that now allow you to speculate on penny stocks from the comfort of your own home. One such example of this is SureTrader. Based and regulated in the Bahamas, SureTrader allow U.S. citizens to pattern trade, without needing to follow the $25,000 minimum margin balance. Moreover, the platform lists a significant number of penny stocks found on Pink Sheets, meaning you can go both long and short.

Much like in the case of cryptocurrencies such as Bitcoin, penny stocks are a highly  speculative asset class. Don’t be fooled by the fact that they operate as a publicly listed company, as regulation in the penny stocks OTC is nowhere near as stringent as major stock markets such as the NASDAQ.

Furthermore, as penny stock companies have small market capitalizations and high volatility levels, liquidity is often a concern. This means that you might have issues offloading your penny stocks when you decide to sell them.

An alternative short-term investment strategy within the penny stocks space is to utilize a CFD platform. Although the likes of Plus500 mainly concentrate on major companies, it is also possible to find organizations that fall within the remit of the sub-$5 penny stock classification.

In doing so, you’ll have access to higher levels of liquidity and potentially, lower levels of spread.

11. Options

The trading of options is an excellent to access the short-term investment space, as the instrument can be obtain on virtually any asset class. In a nutshell, options give investors the ‘option’ to purchase or sell an asset at a later date, at a pre-determined price.

This is broken down in to either ‘puts’ or ‘calls. In its most basic form, calls give investors the right to buy an asset. On the contrary, puts give investors the right to sell.  Which ever way you decide to go, options are ideal for short-term trading because they allows investors to profit when certain conditions are met.

Options are actually considered to be quite a high-risk investment, because while the potential gains are limitless, you also stand the chance of losing 100% of your investment. As such, options are best suited for short-term investors who are experienced in this particular asset class.

12. Binary Trading

Binary trading is a popular online investment sector that requires individuals to predict which way a particular market will move in a pre-defined time period. This particular asset class should only be considered with a pinch of salt, not least because you stand the chance of losing your entire investment very quickly.

Carrying the nickname of ‘all-or-nothing options’, binary investments will only ever result in two possible outcomes. Either the trade makes a fixed amount of profit, or they lose their investment. One such example of a popular binary options mechanism is the GBP/USD pairing.

A binary option might have a one hour expiry date, and the trader must speculate on whether the value of GBP/USD will rise or fall within that time frame. If the trader gets it right, they make a quick profit. If they choose incorrectly, they’d lose their stake. As such, this particular area of short-term investing is often compared to gambling, not least because speculation requires virtually no skill.

Such markets are even more volatile during key economic events such as Brexit or the U.S. Presidential Elections.

13. Dow Jones Industrial Average

The Down Jones Industrial Average, most commonly known as the ‘Dow Jones’, is a index fund that tracks leading U.S. equities. The reason that we have not included the Dow Jones within our stock market indices section is that the index only tracks 30 companies. This is somewhat unusual, as many commentators argue that the Dow Jones is not a true reflection of the wider U.S. equities space.

Nevertheless, we think that the Dow Jones makes an excellent choice for short-term trading because the index offers the opportunity to buy and sell at the touch of a button. As such, whether you want to trade on a minute-by-minute, daily, weekly or even monthly basis, the ongoing price movements of the Dow Jones make this asset class suitable for all strategies.

For those unaware, the 30 companies that constitute the Dow Jones come from a range of industries, however the key denominator is that they have some of the largest market capitalizations in the U.S. stocks arena. Interestingly, the Dow Jones gives more weighting its to constituents that posses higher share prices.

If you want to perform short-term trading on the Dow Jones, you can do this via a CFD with the likes of Plus500. Alternatively, you can also invest in a Dow Jones ETF. Either way, you can speculate on the value going up or down, and you’ll have no issues exiting your trade when you feel the time is right.

14. Soy Beans

Although a rather unconventional short-term investment, the trading of soy beans is actually a market of significant size. The soy beans investment space has heated up in recent months, not least because the industry was caught up in the U.S.-China trade war saga.

In a nutshell, the U.S. is the largest supplier of soy beans to China, making the Asian power-house a key market for U.S. farmers.  With rumours circulating that soy beans was to form part of the trade embargo, the market has been operating in a highly volatile nature.

Once again, this makes it an ideal financial instrument for short-term trading, as you have the chance to make fast gains when the markets react to macro-economic events.

As you won’t have the capacity to physically invest in soy beans, you’ll instead need to purchase an ETF that tracks global prices. The major ETF in this respect is that of the Teucrium Soybean Fund.

Traded on the New York Stock Exchange, the Teucrium Soybean Fund charges a somewhat costly expense ratio of 1.74%. However, this is the price that you will have to pay if you want access to the largest soy beans marketplace in the world.

15. Alternative Investment Market

The Alternative Investment Market, or simply the AIM, is a sub-section of the main London Stock Exchange. The primary goal of the AIM is to list small companies that don’t quite carry the required make-up to list on larger exchanges.

As such, this is often the first stepping-stone for small companies that are looking to make the transition from private to public. The AIM lists more than 1000 individual stocks, all of which offer the chance to trade on a short-term basis.

As these companies carry a small market capitalization, market movement is a lot more volatile in comparison to the main London Stock Exchange. This makes it ideal if you only want to hold on to stocks for a very short period of time.

As the AIM attracts less liquidity, you’ll likely need to go through a traditional online broker such as Hardgreaves Landsdown.

Plus500

Plus500 are a UK based broker than accepts customers from multiple jurisdictions. The company themselves are listed on the London Stock Exchange, and they’ve been offering CFD products since 2008. One of the main selling points to Plus500 is that they host more than 2,000 securities across multiple asset classes, and their CFD trades are commission-free.

Pros:

✅ More than 2,000 CFD securities available to trade

✅ No commissions on trades – everything included within the spread

✅ Highly established – listed company on the LSE

Cons:

❌ Overnight fees for leverage higher than key competitors

80.5% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the risk of losing your money.