Short Term investing? PLEASE HELP!!

Question

I wanted to do some short term investing. I am young with a new job that offers many different ways to invest. The problem is, I dont know where to start. I want to purchase some CDs, but I dont know how to tell if they are good ones. If not CDs, what else can I invest in? Please give me details.

P.S. Im with Vanguard!!

Answer 1

Well its good that you have acknowledged your time horizon. Stocks and long term bonds are obviously out of the picture because those are long term investments. You should look into short term bonds(2-3years) money market funds offered by Vanguard, and Cds like you said. Just be aware that you cannot expect significant capital gains if you are short-term investing. Most short-term investments have low risk but do not have high returns.

Answer 2

CDs are fine for short-term money if you know how long that short term will be (6 months, 12 months, etc.) but there is a penalty for prematurely getting your funds back.  Check at http://www.bankrate.com for good rates.

Vanguard has some money market funds that would be a fine place to park short-term money, and more flexible (in terms of time limits) than CDs, such as Vanguard Prime Money Market Fund (VMMXX).