Editor’s Note: APYs listed in this article are up-to-date as of the time of publication. They may fluctuate (up or down) as the Fed rate changes. CNBC Select will update as changes are made public.
There are many good reasons why you would want to invest your money in the short term. Perhaps you intend to use that cash to buy a new car, fund a first-time mortgage, plan a wedding or simply want to build an emergency fund.
For all these goals, cash needs to be put someplace where it’s safe and accessible on a whim. Enter short-term investment vehicles: the perfect place to stash the cash you’ll need within the next five years.
Though short-term investments typically come with lower rates of return than long-term investments, they can diversify your income and offer flexibility when you need it. Short-term investments stand out for being highly liquid, stable and relatively low risk, so you can count on your money being there when you need to withdraw it quickly at low (or no) cost.
5 best short-term investments
What is a short-term investment?
A short-term investment is a place to put cash you’ll need within the next few months to a few years, like an upcoming down payment, a wedding, a tax bill or your emergency fund. Because the money has a job to do soon, the goal isn’t to chase the highest possible return but rather to keep the cash safe, liquid and growing a little faster than it would in a checking account.
That’s different from long-term investing, where you can ride out market swings in stocks or funds because you won’t need the money for decades. With short-term investments, protecting your principal typically matters more than maximizing growth.
What good short-term investments have in common
The best options for short-term goals tend to share a few traits:
- Low risk – Your principal is typically protected through FDIC insurance or government backing, rather than exposed to market swings.
- Liquidity – You can access your cash on a predictable timeline, without steep penalties, when you actually need it.
- Competitive, often variable returns – Rates move with the broader interest-rate environment rather than locking you in for years (CDs and T-bills are the exception).
- Low or no fees – Maintenance fees and early-withdrawal penalties are minimal, so they don’t eat into modest short-term gains.
- Modest minimums – Most don’t require a large opening deposit, so they’re accessible no matter your balance.
Best for staying flexible: High-yield savings accounts
High-yield savings accounts are as safe and as easy to access as your traditional brick-and-mortar savings account at a big bank, but offer a much higher return (both accounts’ APYs are variable rates).
You can rest assured that your money is protected through FDIC insurance up to $250,000 per depositor per bank, and you can make deposits into your account at any time. Keep in mind that although the Federal Reserve removed Regulation D — which limited “convenient” withdrawals and transfers to no more than six per month — banks generally still enforce this restriction.
The high-yield savings accounts below offer above-average APYs and don’t enforce a limit to the number of withdrawals or transfers you can make. Both the Lending Club LevelUp Savings and UFB Portfolio Savings also provide you with a free ATM card, making it easy to access your savings account on the go.
Happen Bank LevelUp Savings
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Annual Percentage Yield (APY)
4.00% (with monthly deposits of $250 or more), or 3.00%
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Minimum balance
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Monthly fee
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Maximum transactions
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Excessive transactions fee
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Overdraft fees
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Offer checking account?
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Offer ATM card?
Best for a set-it-and-forget-it timeline: CDs
A certificate of deposit, or CD, is another type of deposit account that is federally insured for $250,000 per depositor per bank — meaning your cash is safe up to that limit.
CDs differ from high-yield savings, however, in that they’re not as accessible. Traditional CDs lock up your money for a specified amount of time, but the key is that you pick how long so you know what to expect. CD term lengths vary, typically ranging between three months and five years, and usually the longer the term, the higher the fixed interest rate offered.
CDs can be good vehicles for short-term investments because in a high-interest-rate environment, they allow you to lock in a good rate for, say, three years, at which point you may plan to be ready to buy a house. With a CD, you make a one-time deposit when you open the account — you typically can’t contribute any more money beyond that initial amount.
If you feel that you need greater access to your cash or don’t necessarily want to commit to locking it up, you can go with a no-penalty CD, which allows for easy withdrawals cost-free (just make sure the rate offered is worth it). Other types of CDs exist, too, such as add-on CDs that allow for making additional contributions.
Banks like Ally Bank and Synchrony Bank offer no-penalty CDs.
Ally Bank® CDs
Ally Bank® is a Member FDIC.
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Annual Percentage Yield (APY)
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Terms
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Minimum balance
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Monthly fee
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Early withdrawal penalty fee
High Yield CDs and Raise Your Rate CDs have early withdrawal penalties that vary based on your CD term. With the No Penalty CD, withdraw all your money any time after the first 6 days following the date you funded the account and keep the interest earned with no penalty.
Synchrony Bank CDs
Synchrony Bank is a Member FDIC.
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Annual Percentage Yield (APY)
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Terms
From 3 months to 60 months
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Minimum balance
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Monthly fee
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Early withdrawal penalty fee
There may be an early withdrawal penalty if you withdraw funds from the principal prior to the CD maturity date (the last day of the CD term). The penalty is applied to the amount of principal withdrawn (there’s no penalty on interest). For the No-Penalty CD, early withdrawals are not permitted within the first 6 days after account funding. Following that, only withdrawal of the entire balance is allowed.
APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. For CD accounts, a penalty may be imposed for early withdrawals. After maturity, if your CD rolls over, you will earn the offered rate of interest for your CD type in effect at that time.
Best for spending straight from savings: Money market accounts
The third deposit account on this list, money market accounts, or MMAs, are also stable vehicles for your short-term investments because they offer FDIC insurance up to the standard $250,000 per depositor per bank.
With MMAs, you can deposit cash at any time and the same six-per-statement-cycle withdrawal or transfer limit may apply, depending on your bank. MMAs offer variable interest rates and checking account features, such as check-writing privileges, debit cards, ATM access and out-of-network ATM fee reimbursements. Cash withdrawals from an ATM aren’t typically part of any imposed limit, so this allows you to always access your cash directly and immediately.
Ally Bank and Sallie Mae both offer top-notch money market accounts.
Ally Bank® Money Market Account
Ally Bank® is a Member FDIC.
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Annual Percentage Yield (APY)
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Minimum balance
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Monthly fee
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Offer checks?
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Offer debit/ATM card?
Sallie Mae Money Market Account
Sallie Mae is a Member FDIC.
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Annual Percentage Yield (APY)
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Minimum balance
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Monthly fee
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Offer checks?
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Offer debit/ATM card?
Best for dependable income: Government bonds
Issued and backed by the U.S. government, government bonds are very safe and low-risk, making them ideal as short-term investments. Plus, they offer reliable income. The market for U.S. government bonds is also highly liquid, so you can sell and access your money easily. The best way to buy government bonds is directly through the government’s TreasuryDirect.gov.
In addition to purchasing bonds directly, you can also invest in a government bond fund. Bond funds give you access to various types of bonds so you can invest in a mix.
Best for a quick turnaround: Treasury bills
Treasury bills, or T-bills, are a type of fixed-income security issued by the government with a short maturity term of within a year. T-bills are nearly risk-free and highly liquid, which means they are very safe places to park the cash you’ll need soon.
Keep in mind, however, that T-bill returns typically react inversely with the Federal Reserve benchmark rate; a higher rate set by the Fed means lower returns on T-bills. In contrast, high-yield savings and CDs usually raise their rates as the benchmark rate goes up.
You can purchase T-bills directly from the government via TreasuryDirect.gov or through brokerages like Fidelity and Charles Schwab.
Fidelity Investments
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go® account, but minimum $10 balance according to the investment strategy chosen
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Fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go® has no advisory fees for balances under $25,000 (0.35% per year for balances of $25,000 and over and this includes access to unlimited 1-on-1 coaching calls from a Fidelity advisor)
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Bonus
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Investment vehicles
Robo-advisor: Fidelity Go® IRA: Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other: Fidelity Investments 529 College Savings; Fidelity HSA®
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Investment options
Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
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Educational resources
Extensive tools and industry-leading, in-depth research from 20-plus independent providers
Charles Schwab
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One® Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit
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Fees
Fees may vary depending on the investment vehicle selected. Schwab One® Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract
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Bonus
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Investment vehicles
Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One® Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™, Schwab Organization Account and Schwab Trading Powered by Ameritrade™
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Investment options
Stocks, bonds, mutual funds, CDs and ETFs
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Educational resources
Extensive retirement planning tools
Tips for choosing a short-term investment
- Match the term to your timeline – If you know exactly when you’ll need the money, a CD or T-bill with a matching maturity date can lock in a rate. If your timeline is fuzzy, stick with something liquid like a high-yield savings or money market account.
- Compare APYs across several banks – Online banks often offer higher rates than brick-and-mortar institutions meaningfully since they carry lower overhead costs.
- Watch for withdrawal limits and fees – Even without a federal cap, many banks still enforce their own transfer limits, so be sure to check the fine print before you open an account.
- Consider laddering CDs or T-bills – Splitting your cash across multiple maturity dates gives you regular access to portions of your money while still capturing higher fixed rates.
- Don’t chase yield at the expense of safety – For money you can’t afford to lose, stay within FDIC-insured or government-backed options.
- Recheck rates periodically – Because many of these rates are variable, a top account today may not stay competitive, so it’s worth comparing every several months again.
Compare investing products
FAQs
What’s the difference between a high-yield savings account and a regular savings account?
A high-yield savings account works just like a traditional savings account but offers a significantly higher APY, typically several times the national average. HYSAs are most commonly offered by online banks, which have lower overhead costs and can pass those savings onto customers in the form of better rates.
Are CDs a good short-term option?
CDs can be a strong short-term option if you have a set timeline and want a guaranteed, fixed rate for the length of the term, which can be as short as three months. The main trade-off is that withdrawing your money before the CD matures usually triggers an early withdrawal penalty, so they work best when you know you won’t need the funds right away.
Are Treasury bills safe?
Yes, T-bills are safe because they’re backed by the full faith and credit of the U.S. government, which makes them one of the safest short-term investments available. They also carry a tax advantage since the interest earned is exempt from state and local income taxes, which can make their effective yield more competitive than it looks on paper.
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