Skimm Money: Short-term Investing, Cyber Monday, and Paying Yourself First

How the news affects your finances.

Investing for Short-Term Goals

Investing isn’t only about playing the long game. But investing for goals that are closer on the horizon (think: five years or less) requires a different strategy than investing for longer-term goals (hi, retirement). If you’re looking to make a move like buy a home or start a family sooner rather than later, you’re going to want to opt for investments that are more liquid (read: can easily be converted to cash). Reminder: Investing always involves some level of risk. Consider consulting with a pro to decide what’s right for you. 

Your move:

• Know your timeline. Have just six months to hit your goal? Opt for a highly liquid option like a high-yield savings account. If you’ve got longer (like five years), consider opening a certificate of deposit, aka a CD, instead. CDs offer less flexibility than HYSAs but they usually have higher returns. 

• Choose the right investments. When you’re investing for the not-too-distant future, liquidity and low risk are key. That’s where less volatile investments like money market funds and Treasury bills come in. Of course, there are pros and cons to each, so do your research (or consult a pro) before you commit.

• Adjust as needed. If your goals change, your investment strategy should, too. Ex: Say you're no longer keen on buying a home in the next five years, and you’re all about that retirement plan now. In that case, it would make sense to think about a long-term investment strategy that involves taking on more risk. Think: Stocks or alternative investments (like real estate or art). 

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One act of financial self-care you can do in five minutes.

Pay yourself first.

Think of it as reverse budgeting, aka when you plan your spending around your savings goals (think: a down payment on a home) vs. your expenses (hi, bills, rent, etc.). Take a couple of minutes to create a spending plan. Then, every time you get paid, automatically send part of your paycheck to your savings goals. That way you won’t be tempted to spend $$ meant for your emergency fund, retirement savings, or that next big trip.

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