While some people think that investing is always for the long term, it doesn’t have to be.
Even though the chances of success might be higher if you can keep your money in longer, effective short-term investing is definitely possible. After all, there are ways for you to try to grow your money even when you don’t have a lot of time to do it. That is why there are investors and there are traders.
If you’re looking for tips on how to do short-term investing, here are 3 good ones that can help you have a better experience.
Set a challenging, but realistic goal
While earning a big amount of money in a short span of time isn’t impossible, that would require taking on quite a bit of risk. That’s because you would need to put your money in investment products with high growth potential, which also have high volatility.
Setting a challenging, but realistic goal can help reduce your dependence on such products for success. If you don’t need to grow your money by a lot, you’ll be able to choose from products which don’t require you to take a great deal of risk because they’re not affected by market volatility.
Consider the risk investment’s suitability
Remember that you may not want to take as much risk as your risk profile would allow you to do. That’s because you’ll be needing the money fairly soon.
If you do this, there’d also be a big chance that you wouldn’t earn as much as you’d like. Of course, you may end up even losing money and not have a chance to allow the value to go back up before you need to pull it out.
For the same reason, you shouldn’t be willing to take on more risk than you’d be comfortable with. The chances of having an unhappy experience may be much higher if you do that with a shorter time horizon than normal.
Be mindful of your other goals
While investing for a short-term goal can be important, you still shouldn’t sacrifice your other goals. This is especially true if the latter are for highly significant financial milestones such as retirement or buying a house.
If your more-immediate goals will allow you to accomplish your long-term goals faster or increase your chances of success, then you can consider putting the latter aside for the moment.
However, this isn’t a step to be taken lightly. After all, you won’t be guaranteed that these things will happen the way you want them to, even if you prioritize the short-term goals to help the long-term ones grow.
It’ll give you more confidence and comfort to know that your short, medium and long-term goals are aligned and complement each other.
