Short-Term Investments
If you’re making a short-term investment, you’re often doing so because you need to have the money at a certain time. And so, So the most important thing you should be looking for in a short-term investment is safety.

The Best Short-Term Investments for Growing Your Money.

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If you’re looking to invest money for the short term, you’re probably searching for a safe place to stash cash before you need to access it in the not-so-distant future. In this post, I want to bring to you the best Short-term investments for you to put your money into and get it to grow.

Short-term investments are typically any type of investment that you would expect to hold for less than a year. These could include stocks, bonds, cryptocurrency, or even mutual funds. Short-term investments can be a great way to generate some extra income without taking on too much risk. You may also want to consider keeping some of your money in short-term investments if you’re not quite ready to invest long-term.

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Advantages of Short-term Investments

  • Short-term investing offers flexibility to the investor as they do not need to wait for the security to mature in order to get cash. On the other hand, long-term investments can be liquidated by selling in the secondary market, but the investor earns lower profits.
  • Investors can make substantial profits in a very short amount of time.
  • It is less risky as the money invested per transaction is substantially lower.

Disadvantages of Short-term Investments

  • Short-term investing comes with high costs due to a high transaction volume and their corresponding brokerage commission fees. Taxes and inflation also reduce the returns earned via short-term investing.
  • It involves a certain level of expertise and time, as investors must closely monitor price movements and identify purchase and/or sale spots.

What to look for in short-term investments

I look at short-term investments as a way to protect cash that I may want to use productively at some time in the future. I don’t want to lose money, so I’m not willing to take large gambles with it.

A quality short-term investment must have:

  1. Stability – Small historical risk of losing money over any short time period. Stocks don’t work here for me.
  2. Liquidity – I want to be able to easily and quickly access the investment and turn it into cash. Real estate is an example of an investment that is not liquid.
  3. Low transaction costs – The cost of getting into or out of the investment should be very low to 0.

What are the best short-term investments to grow your money?

Any investment is called a short-term investment if it fulfills the two basic requirements. Firstly, it provides liquidity. Secondly, the investment should be made for a short-term period of 12 months. Now let’s look at the investments that fall in this category.

1. Cryptocurrencies

Cryptocurrencies took the world by storm in late 2017, with the value of Bitcoin reaching a remarkable $20,000 by the end of the year. Started the year at just $1,000, this represented a 12-month increase of 2,000%.

However, even more astonishingly, had you invested in Bitcoin when the digital currency was first launched in 2009, you would have paid just a fraction of a cent.

Bitcoin is now around $40,000 and made a new ATH of $69000 in late 2021. An over 10x gain in a space of a few years for readers that took that investment advice.

If you invest in cryptocurrencies via a CFD (Contract-for-Difference) broker, you have the opportunity to ‘Go Short’. This means that if you think cryptocurrencies will continue to decline in the short term, then your investment can reflect in the form of a CFD.

In terms of risk levels, cryptocurrency trading is one of the more speculative marketplaces in the investment arena. One of the key reasons for this is that volatility levels, although somewhat lower than in their early days, are still super high.

As such, it’s not unusual for the value of cryptocurrencies to go up or down by more than 10% in a 24 hour period. On the other hand, if you like the sounds of short-term trading in the cryptocurrency space, this can actually go in your favor.

Ultimately, if you are looking to trade cryptocurrencies on a short-term basis, then it might be wise to mitigate your risk by buying multiple coins or tokens.

2. Savings account (bank or M-Shwari)

There are several options available, so you need to carefully pick a way that suits your needs. Some of the common ways in which people save/invest their money is to open a fixed deposit or recurring deposit account.

You can also simply open a savings account and collect interest on the balance that you hold. In Kenya, banks usually offer an interest rate of up to 5 percent per annum.

The main reason for saving your money in a bank is because they offer guaranteed returns and carry a very low risk. Ask your local bank about the savings and investing options that are available with them.

On the other hand, you can enroll your Safaricom number for M-Shwari. Just like a bank, you get an accumulative interest for saving your money on M-Shwari. The good thing with M-Shwari is that registering, depositing, and withdrawing money from it is entirely FREE! 

3. Invest in stocks

Stocks are among the best investment opportunities in Kenya. In fact, the Nairobi Securities Exchange (NSE), is among the biggest bourses in Kenya. Some of the most prominent companies listed on the exchange are Equity Bank, Safaricom, Centum, and Co-operative bank.

In recent years, most companies in the index have gone through tough times. This includes previous giants like Uchumi, Home Afrika, and Mumias Sugar. However, the reality is that there is still value in some companies that are listed in the bourse.

For example, a company like Safaricom is a good buy because of its market share in most products and the opportunities it has. Banks, too, are among the best in the region.

To invest in stocks in Kenya, you just have to do three things. First, you need to find a good broker. Among the most prominent brokers in the country are Equity Bank, Kestrel Capital, and Genghis Capital, among others.

Second, you need to create a CDC account. This is the account which you will buy and sell your shares from. Finally, you need to research and find the best companies to invest in and buy. After buying, you will make your money through capital appreciation and through dividends.

4. Forex trading

Forex trading refers to the trading of currencies such as the USD, GBP, or EUR. To illustrate just how lucrative the forex industry is, some estimates put daily trading volumes at a whopping $5 trillion.

The vast majority of this figure is dominated by the inter-bank sector, which involves financial institutions trading currencies with one another. However, outside of the financial institutional space is a retail investment space that allows everyday investors to trade forex at the click of a button via their desktop or mobile device.

Forex trading is ideal for short-term investing, not least because the retail markets operate 24/7, volatility levels of ultra-low (apart from exotic pairs), liquidity levels are super high, and traders have dozens of currencies to choose from.

One of the best ways to trade forex on a short-term basis is to use a CFD broker such as Olymptrade, not least because you have the option of trading more than 40 different pairs

5. Invest in Agriculture

Agriculture is among the best short-term investments in Kenya. For one, the population in most towns is rising and the demand for agricultural produce will continue to rise.

Also, in rural areas, it is relatively easy and cheap to lease a large piece of land. For example, one may lease more than 5 acres of land for less than Ksh. 50,000 for six months.

Although agriculture is a good investment, most people fail for several reasons. First, they attempt to farm items that don’t have a lot of demand because of poor market research.

Second, they fail to get the required education about farming. They assume that they know well about the industry. To avoid this, we recommend that you spend a few weeks on a farm learning about the process.

Third, they hire people who don’t have enough experience in the sector. Like in all industries, the people you hire can make or break your business.

Therefore, we recommend that you conduct a lot of due diligence in the agricultural industry.

6. Collective Savings

Table banking or collective savings is a great way for any investor to grow their savings. In a table banking scheme, you join hands with other individuals and households and pool your money in a common fund. Members of the scheme can borrow money from the kitty at a certain interest rate.

The fund will keep growing as new members enter the pool and from the interest earned from the loans given out. This scheme not only allows you & the community to save money, but it also provides return interest.

P.S: Am always business-minded, if you are a team of members focused to make real money out of your collective savings initiative. Then consider starting a business out of a fraction of what you collectively save.

Here are 40 business ideas that you can start on a small scale, whereas these 71 business ideas are super simple to implement.

7. Invest in digital content

Demand for digital content is rising in Kenya. This has been evidenced by the rising number of digital creators and the number of views that they are getting. A perfect example of this is Jalang’o, the famed radio host and comedian. He started his YouTube channel and barely 6 months down the line he had more than 200k subscribers and his videos had been viewed by more than 7 million people.

There are three main reasons for this growth. First, the cost of streaming has become relatively cheap in the country. Second, because of the pandemic, more people are staying at home and watching more content. Finally, YouTube and other digital platforms are really easy to use. You can watch a show at any time.

On the other hand, I launched this blog on February 28th, 2022, and by the end of March, I had more than 5k verified email subscribers and 2k verified forum users. A secret you may not have known, a blog with such a follower base could make 10 times the revenue more than a youtube channel with the same follower base.

For starters, digital content creators make money in four main ways. First, the most common is to use Google AdSense. This is a program where Google pays you for showing ads in your videos. Second, you can have sponsored content or ads from brands you use i.e Safaricom and Bluehost, third you can solicit donations from your viewers and finally, you can sell a product.

I put together a few posts to help your first foot up on building digital content businesses. They include Starting a youtube channel, Starting an influencer business, creating a blog that really pays, building a website appand building a web forum

8. Invest in Self 

Any expert is made on average 5 years. I never knew this until recently. This just confirms the claims you watch or read that a guy earned zero for the past five years blogging or vlogging. And then boom… cash breakthrough happened to him. 

Now that we are discussing short-term investments, 5 years is a long period of time, right? What about if you can consider investing in online skill-building courses and sell your services online on platforms like Fiverr or Upwork after you have mastered the skill.

Some of these courses take between days to a few months after which you can be sure to make an income for yourself.

9. Peer to Peer Lending

Peer to Peer Lending is a way for you to invest in the growth of your local businesses. In this method, a small circle of friends or investors can invest in businesses in return for a share of the profit.

10. Invest in precious metals

If you want a safe investment that provides moderate levels of returns over a period of time, then you can consider investing in precious metals such as gold and silver. Gold and silver usually appreciate in value over a long period of time.

They are also considered safe because they do not depreciate a lot in value even during times of market volatility.

However, in terms of its real-world value, the price of gold fluctuates quite widely in the open marketplace. In fact, although it is viewed as a store of value, Gold prices are at times somewhat volatile.

In reality, this makes Gold an excellent choice for short-term trading, not least because you have the opportunity to trade it on a daily, weekly, or even monthly basis. In fact, with the presence of ETFs and CFDs, some short-term investors even trade Gold on a minute-by-minute basis. 

My advice to you is that if you are looking to trade Gold on a short-term basis, then you will be required to perform in-depth research on GDP growth levels.

11. Real estate 

Traditionally investing in real estate was outside the capabilities of most individuals. In recent times, instead of buying a property outright, we can invest in the growth of the real estate market through Real Estate Investment Trusts  (REITs.)

You can invest in a REIT with sums that are much lower than what is needed to buy a piece of property. You can also exit your investment depending on the terms of the REIT.

Real estate investments may offer good returns if market prices are up but you may also lose money.

12. Mutual funds

A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio.

Investors buy shares in mutual funds. Each share represents an investor’s part ownership in the fund and the income it generates.

13. Buy bonds

A Bond is a way in which the Government or Corporations borrow money from the public. A bond usually has a time period. Once the time period is over, you get your money back along with a certain amount of pre-agreed interest.

Kenya offers treasury bonds that have a repayment period that can range between one to thirty years. These bonds can be quarterly, semi-annually or annually in nature. The amount of interest that you can earn from these bonds depends on the time period and the amount of the bond.

14. Invest in Capital markets

The Nairobi Stock Exchange or the NSE is a way for the public to invest in financial products. There are several different financial products that you can invest in such as Shares, Bonds, ETFs, REITs, Derivatives, and so on.

Each type of financial instrument carries its own risk. You need to understand how each financial instrument works before investing any money into it. Remember that investments in financial instruments are always subject to market risk. Hence, it is possible for you to lose money instead of gaining it.

Our final thoughts

Above are our best picks on the best short-term investment opportunities for you to grow your money. Still, there are many opportunities where you can invest and get decent returns. We recommend that you take time to research, be perseverant, and learn about the industry you are getting into.

Do you think we left out a point or two? Have you invested in any of these opportunities? 

Share your views in the comment section and let’s help each other grow online.

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