Short-term investments: best recommendations

Nowadays, the financial and investment market is booming, with a wide variety of options allowing you to choose between short term investments and long term also.

Short-term investments are generally associated with shorter redemption periods, typically one to three years.

What are short-term investments?

Unlike long-term investments that can last for two years or more, short-term investments are those that last up to one year, some lasting up to a week.

It is a type of investment recommended for those who want a quick return or want their money in a shorter period.

Therefore, it is ideal for planned purchases that are not too expensive, or for building up emergency funds.

Because of this, it is widely used by individuals or companies that want to preserve capital with more modest gains.

Unlike other types of investment, when it is short-term the return is generally lower, and consequently the risks are lower.

This happens mainly because the money spends little time earning interest, so it has less chance of suffering significant variations that could cause losses to your investment.

Although the returns in short term investments may be more modest compared to longer-term options, they offer a way to preserve capital and mitigate risk.

A fundamental aspect is liquidity, that is, the ease with which an investment can be converted into cash.

Many short-term investments are highly liquid, allowing investors to easily withdraw their funds.

Short-term investment options

The options of short term investments end up being more accessible to investors, especially those who have less capital to invest.

And in the financial market there are different short-term investment options, see what they are:

Savings

Savings are often considered a short-term investment due to their immediate liquidity and accessibility.

It is a popular option for those looking for a simpler and safer way to save their money in the short term.

It can be used for emergency situations or short-term goals, for example, to be able to buy a more expensive computer or something that is a little above your budget but not extremely expensive.

Funds deposited in savings can be withdrawn at any time, providing an immediate source of liquidity.

Furthermore, savings income is exempt from Income Tax, which can be an advantage for investors looking for simplicity and tax savings.

And we cannot forget to mention security, as it is one of the types of investment with the least risk and volatility.

However, the profitability of savings is not the best, which is why many people avoid this type of investment, or invest little capital.

Selic Treasury

The Treasure Selic, or Tesouro Direto Selic, is one of the public bonds offered by the National Treasury in Brazil. It is part of the Tesouro Direto program, which allows individual investors to purchase bonds directly from the federal government.

The yield on the Treasury Selic is related to the basic interest rate of the Brazilian economy, known as the Selic Rate. This means that the yield on the bond follows variations in the Selic rate.

But among short-term investments, the Selic Treasury is one of those with the least risk, as it is guaranteed by the Brazilian government.

O Selic Treasury It has daily liquidity, which means that the investor can withdraw their funds at any time, being a very flexible option in terms of access to the invested money.

For these reasons he is constantly singled out for short term goals, such as an emergency reserve or goals to be achieved in the near future.

DI Funds

DI Funds (DI Referenced Funds) are a category of investment funds that aim to follow the variation of the DI (Interbank Deposit) rate, which is close to the Selic rate.

These funds are known for being conservative investment options, recommended for those seeking a return close to the basic interest rate of the Brazilian economy.

They are also low risk since most of their securities are public, and private securities also present low risks.

LCIs and LCAs

LCI stands for Real Estate Credit Letter while LCA stands for Agribusiness Credit Letter, and these are two types of short-term investments.

It is a fixed income investment that financial institutions offer to guarantee financing for other people.

These are forms of investment considered low risk as they are guaranteed by assets, whether real estate or agribusiness.

Both are known for offering income tax exemption for individuals and are considered conservative investments.

LCI and LCA are issued by financial institutions to raise funds for their respective sectors. The funds raised are generally directed to financing real estate and agribusiness ventures.

Both types can have different time frames, ranging from months to a year or even more than a year.

Before investing in LCIs or LCAs, it is important to analyze the specific conditions of each security, including terms, remuneration rates, and redemption conditions.

These two types of short-term investments will allow you to diversify your portfolio, one of the most important things for all investors, whether they are experienced or beginners.

CDBs 

Bank Deposit Certificates (CDBs) can be either short-term or long-term, depending on the maturity date of the security chosen by the investor.

Financial institutions issue certificates with a variety of terms, allowing investors to choose options that align with their financial goals.

Many of them have very short terms, such as 30, 60 or 90 days, and can even last a few months. In this case, they have much faster liquidity.

While others can last for years or decades, with a generally more attractive interest rate.

Identify the short term investments that attract you the most and you will be able to have better returns according to your needs.