The information in this article is provided for educational purposes only and should not be considered financial, investment, or tax advice. You should check with your legal, financial, or tax advisor for advice specific to your situation. Investment products and savings options may vary based on your individual circumstances.
Maybe you've got a chunk of cash sitting in your checking account earning almost nothing, and you know there's a better option – you're just not sure what it is. Short-term investments offer a middle ground between letting money sit idle and locking it up for years in the stock market.
The "best" short-term investment depends on your goals, time horizon, and risk tolerance. The options below are commonly considered among the most suitable low-risk choices for money you expect to use within the next few years.
Below, we'll walk through seven low-risk options that can help your money grow while keeping it accessible when you need it.
Key takeaways
Short-term investments prioritize safety and liquidity, making them ideal for one- to three-year goals.
High-yield savings accounts, money market accounts, CDs, and Treasury bills offer some of the safest options with competitive returns.
The right choice depends on when you'll need your money, how much risk you're comfortable with, and whether you want easy access to your funds.
What is a short-term investment?
A short-term investment is any financial product designed to hold your money for a brief period – typically anywhere from a few months to three years or less. The goal isn't dramatic growth. Instead, you're looking to keep your principal safe while earning modest returns along the way.
Why does the timeline matter so much? When you're investing for retirement decades away, you can ride out market ups and downs. But when you need that money for a car down payment next year or an emergency fund you might tap into tomorrow, you can't afford to watch your balance drop 20% right before you need it.
Short-term investments share a few key traits:
Low volatility: Your balance stays relatively stable, even when stock markets swing wildly.
High liquidity: You can access your money quickly, often within a day or two. These are considered liquid assets because they're easy to convert to cash.
Modest returns: The trade-off for safety is that you won't see the growth potential of stocks or real estate.
Think of short-term investments as a parking spot for money you'll need soon. They're not meant to build wealth over decades – they're meant to protect what you already have while earning a little extra. Understanding the difference between saving and investing can help you figure out the right mix for your goals.
7 best short-term investments in 2026
Here are the best short-term investments for your savings this year.
1. High-yield savings accounts
High-yield savings accounts work exactly like regular savings accounts, but they pay higher interest rates. Many online financial institutions offer APYs several times higher than the national average because they have lower overhead costs than banks with physical branches.
Your deposits are typically FDIC or NCUA insured, meaning they're protected up to $250,000. Access timing varies by bank and transfer method, making high-yield savings accounts one of the most liquid options available.
The downside? Rates can change. Unlike a CD that locks in your rate, a high-yield savings account rate can drop if the Federal Reserve lowers interest rates.
2. Money market accounts
Money market accounts blend features of savings and checking accounts. They often pay competitive interest rates while giving you limited check-writing privileges or a debit card for easy access to your funds.
The catch is that many money market accounts require higher minimum balances to earn the best rates or avoid monthly fees. If you have a larger sum to set aside, a money market account can offer both flexibility and decent returns. For smaller balances, a high-yield savings account might make more sense.
3. Certificates of deposit (CDs)
A certificate of deposit locks your money away for a set term – typically anywhere from three months to five years – in exchange for a guaranteed interest rate. The longer the term, the higher the rate tends to be.
CDs work well when you know exactly when you'll need your money. Saving for a wedding in 18 months? A CD maturing right before that date locks in your rate and removes the temptation to spend the money early.
However, withdrawing early usually triggers a penalty that can eat into your earnings. Some financial institutions offer no-penalty CDs that provide more flexibility, though often at slightly lower rates.
Tip: Consider building a CD ladder by spreading your money across CDs with different maturity dates. For example, you might put equal amounts into short-term, medium-term, and longer-term CDs. As each one matures, you have regular access to portions of your funds while still capturing higher rates on the longer terms.
4. Treasury bills (T-bills)
Treasury bills are short-term government securities backed by the U.S. government, making them among the safest investments available. T-bills mature in four weeks to one year and are sold at a discount – you pay less than face value upfront and receive the full amount when the bill matures.
One nice perk: T-bills are exempt from state and local taxes, which can boost your effective return depending on where you live. You can purchase them directly through TreasuryDirect.gov or through a brokerage account.
The trade-off is that your money is tied up until maturity. If you need funds before then, you'd have to sell on the secondary market, which could mean getting less than you expected.
5. Short-term bond funds
Short-term bond funds pool money from many investors to buy a diversified portfolio of shorter-duration bonds. Bond funds may offer slightly higher yields than savings accounts while maintaining relatively low risk.
Unlike individual bonds that you hold until maturity, you can sell fund shares on any trading day. That gives you more liquidity. However, bond fund values can fluctuate with interest rate changes. If rates rise sharply, the value of existing bonds drops, and you could lose a small amount of principal if you sell at the wrong time.
For most people, the fluctuations are minor. But if you absolutely cannot afford to lose any principal, a savings account or CD might be a better fit.
6. Money market funds
Money market funds are mutual funds that invest in high-quality, short-term debt securities like Treasury bills and commercial paper. Commercial paper refers to short-term loans that large corporations issue to cover immediate expenses. Money market funds aim to maintain a stable $1 share price while paying competitive yields.
One important distinction: money market funds are not FDIC-insured. They're considered very low-risk due to the quality of their holdings, but they don't carry the same government guarantee as a bank account. For most investors, the risk is minimal – but it's worth knowing the difference.
7. Cash management accounts
Cash management accounts, often offered by brokerages and fintech companies, combine features of checking, savings, and investment accounts. They typically sweep your cash into partner banks or money market funds to earn interest automatically.
Many cash management accounts offer FDIC insurance through multiple partner banks, sometimes covering balances well above the standard $250,000 limit. They can be a convenient option if you want to keep your savings and investments in one place rather than juggling multiple accounts.
How to compare short-term investment options
When evaluating short-term investments, three factors matter most: safety, liquidity, and yield. Here's how the most common options stack up:
Investment Type | Safety | Liquidity | Typical Yield
|
High-yield savings account | Very high (FDIC-insured) | Very high | Moderate |
Money market account | Very high (Typically FDIC-insured when offered by banks) | High | Moderate |
CD | Very high (FDIC-insured) | Low until maturity | Moderate to high |
Treasury bills | Extremely high (government-backed) | High | Moderate |
Short-term bond funds | Moderate to high | High | Moderate |
Money market funds | High | Very high | Moderate |
Cash management account | High to very high (often FDIC-insured) | Very high | Moderate |
The safest options tend to offer the most modest returns. That's the fundamental trade-off with short-term investing – you're prioritizing protection over growth.
How to choose the right short-term investment
Start by asking yourself when you'll need the money. If you might need it tomorrow for an unexpected expense, a high-yield savings account or money market account makes sense because you can access funds quickly. If you're saving for something 18 months away and won't touch the funds before then, a CD could lock in a better rate.
Next, consider how much risk you're comfortable with. Even "low-risk" investments carry some trade-offs:
Bond funds can lose value if interest rates rise sharply.
CDs penalize early withdrawals, sometimes significantly.
Treasury bills require you to wait until maturity for full value.
Think about convenience, too. Do you want your short-term savings separate from your everyday spending? Or would you prefer everything in one account? Your answer might point you toward a dedicated savings account or a cash management account that does double duty.
A few common mistakes to watch out for:
Chasing the highest yield without reading the fine print: Some accounts advertise high rates that only apply to small balances or require jumping through hoops to qualify.
Locking up money you might need: If there's any chance you'll need funds early, avoid products with steep withdrawal penalties.
Keeping too much in low-yield accounts: While safety matters, leaving large sums in accounts earning almost nothing means inflation slowly erodes your purchasing power over time.
Start building your short-term savings today
Short-term investments won't make you rich overnight, but they serve a crucial purpose: protecting money you'll need soon while helping it grow a little along the way. Whether you're building an emergency fund, saving for a major purchase, or just want a safe place to park extra cash, the right short-term investment can help you reach your goal faster.
The best time to start? Now. Even small amounts add up over time, and getting into the habit of setting money aside matters more than finding the "perfect" account.
Ready to take the first step? Open a Chime savings account and start growing your short-term savings with no monthly fees.1 To open a Chime Savings Account, you must have an eligible Chime Checking Account.