Short Term Investment: Definition, Risk, and The Examples

Jun 22, 2022
Investasi Jangka Pendek

There are many investment types to choose from. Most of them are divided into long term investment and short term investment. If you prefer investments with lower risk, then this short-term investment could be the best choice for you to choose.

Unfortunately, some new investors still don’t get an adequate picture of this type of investment. They don’t really know what short-term investment is, and what is an example of short-term investment. Therefore, to help provide sufficient information, the following article will help explain it.

About Short Term Investment Definition

Short Term Investment (source: freepik).

Short Term Investment (source: freepik).

The first thing to understand is what short-term investing is and what types of short-term investments are in general. This short-term investment as the name implies is a form of investment that is chosen for a certain short period of time. So it generally only lasts a short time.

Most short-term investments today only have a maturity of about one year. There is even a shorter period of time. Because time is short and fast, investments can keep changing over time. So investors need to pay regular attention to this type of investment.

Also read: Long Term Investment: Definition, Risks, and The Examples

Short-Term Investment Goals

Usually there are several goals to be achieved in most people who choose short-term investments. The most common goal is to raise funds in a short period of time. If you are looking for flexibility, for example if you need funds for urgent needs in the near future, easy to disburse funds, then short-term investment is the right choice..

Another objective of this investment is usually to increase business capital. Especially for entrepreneurs who want to expand their business. Then short-term investments can be useful fresh funds.

Short-Term Investment Gains

Opting for short-term investments also provides some interesting advantages. In general, by choosing to make this investment, the following benefits can be obtained:

  •   • More flexible, usually this investment can be adjusted to the needs of the capital owner. So easy to set up.
  •   • The return on profits is definitely faster. It doesn’t take long to see the expected investment returns.
  •   • Grow the company faster. For business owners, short-term investment provides an opportunity to grow faster.

Also read: Fintech Investment: Definition, Tips, and Risks

Short-Term Investment Risk

Of course, as with most other types of investment, choosing short-term investments still carries risks. Although most people consider that this type of investment has a low risk. One of the risks is that if you invest in a bank that does not have a good reputation, potential financial losses can occur.

On the other hand, the possible risks are small gains. Not to mention the administrative and tax deductions imposed. So if you choose this type of investment, of course, you have to consider the pros and cons of the type of investment that you will choose later.

Also read: Outstanding Female Investors and Entrepreneurs from Indonesia

Short Term Investment Samples

Short Term Investment (source: freepik).

Short Term Investment (source: freepik).

For those who are interested in making short-term investments, there are many examples to choose from. Here are some examples of short-term investments that are suitable as an option:

1.Term Savings

It is an investment that can be selected for a certain period of time for certain needs in the near future. After the investment period is complete, funds can be easily withdrawn to be used as needed.

2. Deposits

This type of investment can generally be chosen for a period of time, either in months or years. Because the majority of banks currently offer deposit programs ranging from 1 month, 3 months, 6 months to 12 months or 1 year.

3. Fund

Another example is mutual fund investments, which can also be selected for a certain period of time, for example 6 months or 12 months. Thus the benefits obtained will be enjoyed in the near future.

4. State Retail Bonds

The next form is the state retail bond which is often called ORI. The period generally reaches 3 years with an initial deposit capital of only Rp. 1 million.

5. P2P Lending

Another example of a short term investment is P2P lending. This is a short term loan investment. Where the lender benefits from the funds that will be returned by the borrower.

6. Stock

Stock investments can also be categorized as short-term investments. Provided that the purchase of shares is done in a fast time scale. It’s just that the risk of choosing this kind of stock investment is high, although the profits can also be higher.

Also read: Top 24 Venture Capitals & Angel Investors in Singapore

7. Forex Trading

As with investing in stocks, forex trading also has a fast return on investment. However, to be able to trade forex properly, you need to know in detail about the investment mechanism.

8. Property

Buying property and selling in a short time can also be included in the form of short-term investment.

9. Gold

Another alternative is to buy gold bars, where this form of investment can be sold at any time if needed.

10. Retail Saving Bonds

This is a similar investment to ORI. The risk is quite small with the amount of profit that is quite attractive to get.

This is an explanation related to short-term investment complete with an understanding of what short-term investment is and examples. So that anyone who wants to do this type of investment will not experience any more confusion. Thus, capital owners will be able to choose the best short-term investment instruments that can provide the most optimal benefits as expected.