Saving for the short term

Keeping your money safe and earning from a short-term financial investment is smart as long as you can access your money anytime you need it.

Risk and return are twin factors that you should weigh carefully. To obtain higher returns — especially over a short period of time — you might expose your money to unnecessary risks. The stock market isn’t a good place to put your money if you'll need it within a few years. Stocks are ideal investments for retirement accounts or other long-term financial goals, but they’re too risky to be considered for money you’ll need soon.

Technically, you do not “keep” money in bonds. You buy a bond with cash and wait for the bond's maturity or sell the bond to someone else to get the money back from the investment.

You might be more concerned about the return OF your money than the return ON your money during the short term.

Here are accounts to look for in a bank savings portfolio:

High-yield savings accounts.

High-yield savings accounts (and money market accounts) are a great way to save, especially if safety is a priority. Interest rates are low right now, but as the economy continues to improve, yields will rise.

Certificates of Deposit

CDs generally offer better yields than savings accounts, but at the cost of liquidity. Your money is kept by the bank for a set period of time (six months, two years, etc.) and in exchange they pay you a higher rate. Determine when you will be needing your cash and choose which CD is best for you.

Low-risk investing doesn't yield much, especially in the short term. But your money remains accessible whenever you need it, and for difficult and uncertain times like these, you'll want to keep your money safe and ready.