Know Your Short Term Stock Investment – Before you decide to invest your idle funds in stocks, it’s a good idea to learn the ins and outs of stock investing, especially for the short term. In addition, also know the potential losses that may be experienced later. The current stock investment system is highly volatile, influenced by various factors. You will potentially experience financial ups and downs from the invested funds.
Understanding Short-Term Stock Investment
A short-term stock investment is a form of investment that allows for immediate disbursement or which is funded from excess cash funds and is temporary.
Excess funds belonging to the company with the intention of only being held for twelve months or less. However, the excess cash for the company is not income. That is excess cash that is usually invested because at that time the funds were not used in the short term.
Because the period of unused cash is relatively short, the investment must also be made in a short period of time. Forms of short-term investment can usually be done by depositing funds, bank certificates or securities such as stocks or equity securities and bonds or debt securities.
In short-term stock investments there are several conditions that must be followed by these investors.
Three conditions that must be met, namely:
- Have a market and can be traded later immediately.
- It is intended for a period of time that is not too long to be sold and if the funds will be needed for the general activities of a company.
- There is no goal to dominate other companies.
You will invest in the future of you and your family, whether it’s the house you dream of, your children’s education, or an old-age pension. We know that each of these events occurred at different times. This of course requires careful planning.
Tricks for short-term stock investment for your stock investment plan with a long-term goal, namely through diversification. This is key to addressing the financial needs of you and your family.
However, short-term investments have not very large returns or high risks. Of course, it also depends on where you put the investment money. However, for most people this is important as an effort to generate more profits when compared to cash savings or other liquid assets.
Short-Term Stock Investment Solution
The Solution to invest in short-term stocks that can be done is to maintain the investment which can later be easily liquidated in conditions when needed, especially in an emergency.
No doubt cash is the best solution, but of course without offering interest. Having a savings account will indeed help a little, but still with low interest.
Meanwhile, investing in short-term stocks will offer advice on how to increase the returns you have on your assets to keep them more liquid. This is a valuable reserve of funds against financial and family problems in the future, for example by stock gains that are accumulated per month. Of course you need to plan an investment that will be chosen according to the conditions that will occur later in your life.
Different things will happen at different times. Planning is needed according to the conditions that will occur in the future. For example, your plan is to finance your children’s education or plan to increase your investment in buildings or vehicles later.
In financial planning, it’s a good idea to make a plan or mapping. For example, what do you and your family need in the future and when you or your family will need it. So the following questions need to be considered:
- What is the purpose of your financial investment?
- How much money should be invested?
- In what period of time do you have to wait until you need the funds again?
- What about the convenience that will be obtained by investing in these short-term stocks?
- Is there a chance you could lose the investment?
Let’s take a look at the following phenomena that might provide other input for those of you who want to invest in your short-term stocks.
Advantages of investing in short-term stocks
One of the things that is considered a big advantage of investing in short-term stocks is flexibility. You do not need to tie up your funds in the long term.
There is a quick return of funds Invested
Funds will pay off in a short time. This makes it possible for you to divert it into another form of profitable asset.
Real and short results
Many investors want to see the results of their investments in a short time. With short-term stock investments, you can see the results of these stock investments in a relatively short period of time according to what has been determined. More relief to you than long-term investments whose results are sometimes disappointing and have been waiting for a long time.
Become a symbol of achievement
For you as a businessman, getting profit from the business you run is a symbol of the success of the business. Especially if these results can be achieved in a relatively short period of time. Short-term stock investments allow you to earn profits in a relatively short period of time.