The Top 3 Short Term Investments

Investment is often something that takes place over a long period of time, often years or more and as a result, it doesn’t generally have a reputation for being able to produce positive results quickly.  Many people equate investments to savings but in reality, investing your money wisely in the short term can produce regular profits that are just like earning an income.  The stock market is generally considered best as a long term investment but there are three other financial markets which are traded all over the world and earn traders a living every day.

The strategy with any of these financial products is that you aim to buy low and sell high or vice versa.  It’s a relatively simple principle but the way you go about deciding what to do will vary depending on what you are trading.  All trading can be done with a small initial outlay through an account with an online broker.  There’s no need to leave your desk; essentially all you do is decide which and how much of an asset you want to buy or sell, wait for the price to move in the direction you predict and then earn the profits.

Commodities by mr lynch, on Flickr. This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

Commodities

Commodities covers a broad spectrum of consumable assets.  This includes oil, farm products and a number of other items.  What you decide to trade is entirely up to you, though most people will tend to stick with only one or two so that they have an excellent understanding of that particular niche.  Just as with all other financial instruments, commodities can fluctuate considerably and this will vary from asset to asset.   Government announcements and analysis can have significant impact upon prices.  While you can simply watch for patterns on price charts, you must always be aware of the fact that the commodity market is a supply and demand one and is vulnerable to things such as weather.

Precious Metals

Investing in precious metals has been a practice for hundreds of years because of the intrinsic value that metals like gold and silver have.  It used to be the case that many world currencies were backed by gold reserves, though this is no longer in use.  On a long term basis, gold is often seen as a way of beating inflation, but on the short term, precious metals are volatile which means they are ideal for very quick trades.

Forex

The foreign exchange market is the largest and most liquid market in the world.  Trading volumes around the world exceed $3 trillion daily, and it is the job of the forex trader to get a cut of the profits generated from this.  Within forex, there are a variety of different products, including spot trades, CFDs and spread betting.  Go here for spread betting explained.  Forex is slightly different to other investments in that there are always two currencies quoted in a price because they only have a value in relation to one another.  EUR/USD is the most popular, though the GBP is also widely used.