Best Short-Term Investments: Our Top Picks
Explore the best short-term investments in 2025. Compare HYSAs, CDs, T-Bills, and more to safely grow your money without locking it away for years.
Not everyone wants to lock up their money for decades, and that’s okay.
With that being said. choosing where to keep your money in the short term can be tricky. You want growth, but you also need safety and flexibility. The good news? With interest rates still high in 2025, there are plenty of smart places to put your cash to work.
In this article, we’ll break down the best short-term investments available today and help you match the right option to your financial goals.
The Benefits of Short-Term Investments
Not every investor has a 20+-year timeline. Sometimes, you simply need a safe place to grow your money for a few months or years without putting your principal at risk. That’s precisely the role of short-term investments.
Short-term usually means holding an investment for less than three years, and most investors look for a mix of:
- Capital preservation (keeping your money safe)
- Liquidity (being able to access cash when needed)
- Modest returns (beating inflation and checking account yields)
With interest rates still relatively high in 2025, this is honestly one of the most appealing environments in years for short-term savers. Below are our top picks!
Our Opinion on the Best Short-Term Investments in 2025
| Investment Option | Typical Yield (Sept. 2025) | Liquidity | Risk | Best For |
|---|---|---|---|---|
| High-Yield Savings Account | 4.00%–4.50% APY | Instant | None (FDIC insured) | Emergency fund, flexible cash |
| 6–12 Month CDs | 4.25%–5.10% APY | Locked until maturity | None (FDIC insured) | Savers who won’t need money soon |
| U.S. Treasury Bills | ~5.2% (6-mo) | 4–52 weeks | Virtually none (gov-backed) | Safety-first investors |
| Money Market Accounts | 3.50%–4.25% APY | Limited withdrawals | None (FDIC insured) | Stable savings with some access |
| Money Market Funds | 3.75%–4.50% APY | T+1 (next-day) | Low (not FDIC insured) | Higher yield seekers |
| Short-Term Bond ETFs | 3.50%–5.00% | Sell anytime (market-based) | Mild fluctuations | Investors OK with small risk |
| Cash Management Accounts | 4.00%–4.75% APY | Flexible | FDIC-backed via partner banks | Tech-savvy savers |
1. High-Yield Savings Accounts (HYSAs)
High-yield savings accounts remain one of the safest and most flexible options for short-term savers. These accounts, offered by online banks and credit unions, typically pay 10 to 15 times more interest than traditional savings accounts.
- Typical APY (Sept. 2025): 4.00%–4.50%
- Liquidity: Full access to your cash with no penalties
- Risk level: Extremely low; deposits are FDIC- or NCUA-insured up to $250,000
Advantages:
- Ideal for emergency funds
- No penalties or lockups
- Federally insured
Drawbacks:
- Rates fluctuate with Federal Reserve policy
- Online-only access at some institutions
HYSAs are the simplest way to earn meaningful interest while keeping money accessible.
Learn more: FDIC Deposit Insurance
2. Certificates of Deposit (CDs)
A CD is a deposit account where you agree to leave your money untouched for a set period, ranging from a few months to several years. In return, banks guarantee a fixed interest rate.
- Typical APY (Sept. 2025): 4.25%–5.10% on 12-month CDs
- Liquidity: Funds locked until maturity unless you pay a penalty
- Risk level: Very low; FDIC insured up to $250,000
Advantages:
- Guaranteed returns regardless of market swings
- Ability to “ladder” CDs to maintain flexibility
- Higher APYs than savings accounts in many cases
Drawbacks:
- Early withdrawal penalties can cut into returns
- Inflation may erode purchasing power if rates fall
For conservative savers who can lock funds for 6–12 months, CDs are an attractive, predictable option.
3. U.S. Treasury Bills (T-Bills)
Treasury bills are short-term government securities sold at a discount and redeemed at face value when they mature. They’re among the safest investments available.
- Current Yield (Sept. 2025): ~5.2% on 6-month T-Bills
- Liquidity: Terms of 4, 8, 13, 26, and 52 weeks
- Risk level: Virtually none; backed by the U.S. government
Advantages:
- Considered “risk-free” in terms of default
- Exempt from state and local taxes
- Can be purchased directly at TreasuryDirect.gov with as little as $100
Drawbacks:
- Cash is tied up until maturity unless sold
- Lower yields than riskier investments
T-Bills are perfect for investors who prioritize safety and tax efficiency over flexibility.
Learn more: TreasuryDirect.gov
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4. Money Market Accounts (MMAs)
Money market accounts combine elements of savings and checking accounts, offering higher yields than standard savings accounts plus limited check-writing and debit privileges.
- Typical APY (Sept. 2025): 3.50%–4.25%
- Liquidity: Limited withdrawals per month under federal rules
- Risk level: Very low; FDIC insured up to $250,000
Advantages:
- Better rates than traditional savings
- Access to checks or debit cards
- FDIC insurance adds protection
Drawbacks:
- May require higher minimum balances
- Withdrawal limits can be restrictive
MMAs work well for people who want a middle ground between savings and spending accounts.
5. Money Market Funds
Money market mutual funds invest in short-term debt securities like commercial paper and Treasury bills. Unlike money market accounts, they are not FDIC insured.
- Typical Yield (Sept. 2025): 3.75%–4.50%
- Liquidity: Next-day access (T+1 settlement)
- Risk level: Low, but not risk-free
Advantages:
- Generally higher yields than savings accounts
- Diversification across many short-term instruments
- Easy to buy through most brokerages
Drawbacks:
- Not insured by the FDIC
- May “break the buck” in rare scenarios, meaning shares could lose slight value
Money market funds are best for investors who want slightly higher yields and are comfortable without FDIC coverage.
6. Short-Term Bond ETFs
Short-term bond ETFs hold a basket of government and corporate bonds with maturities under five years. They offer higher potential yields but also introduce some price fluctuation.
- Typical Yield (Sept. 2025): 3.50%–5.00%
- Liquidity: Bought and sold on stock exchanges like regular ETFs
- Risk level: Moderate; bond prices can fall if interest rates rise
Advantages:
- Diversification across many issuers
- Higher yield potential than CDs or savings
- Easy to trade via brokerage accounts
Drawbacks:
- Prices fluctuate daily
- Interest rate sensitivity can affect returns
Examples include the iShares Short Treasury Bond ETF (SHV) and the Vanguard Short-Term Bond ETF (BSV).
7. Cash Management Accounts (CMAs)
CMAs are offered by brokerages and fintech firms as all-in-one solutions for saving, spending, and investing. They often sweep deposits into multiple partner banks for extended FDIC insurance coverage.
- Typical Yield (Sept. 2025): 4.00%–4.75%
- Liquidity: High, typically no restrictions on access
- Risk level: Very low; funds FDIC insured through partner banks
Advantages:
- Consolidates savings, checking, and investing
- Higher yields than many traditional banks
- Often includes extra features like bill pay and debit cards
Drawbacks:
- Rates can change frequently
- Not every CMA provider offers the same protections
CMAs appeal to tech-savvy savers who want flexibility and integration with investment platforms.
How to Choose the Right Short-Term Investment
When weighing your options, consider:
- Timeline: How soon will you need the funds?
- For under 6 months: HYSAs or T-Bills
- For 6–12 months: CDs or short-term bond ETFs
- For 1–3 years: Laddered CDs or bond ETFs
- Liquidity: Do you want immediate access or are you comfortable locking money up?
- Risk tolerance: Do you value complete safety (HYSAs, CDs, T-Bills) or are you comfortable with mild fluctuations (bond ETFs, money market funds)?
- Tax considerations: Treasury securities are exempt from state/local tax, which can matter in high-tax states.
Final Thoughts
Short-term investments are not about chasing high returns, they’re about preserving your capital, keeping funds liquid, and earning steady interest.
As we mentioned previously, in 2025, elevated interest rates make this one of the strongest short-term saving environments in more than a decade. A high-yield savings account is perfect for accessibility, while CDs and T-Bills offer guaranteed returns if you can lock funds temporarily.
The best option is the one that fits your timeline, risk tolerance, and financial goals.
FAQs
1. What counts as a short-term investment?
Investments held for less than three years, often 3–24 months, where safety and liquidity matter more than maximum returns.
2. Are short-term investments safe?
Yes. FDIC-insured accounts (HYSAs, CDs, MMAs) and government-backed securities (T-Bills) are among the safest choices. Market-based options like ETFs carry slight risk.
3. Which short-term investment is best right now?
If you need liquidity, a high-yield savings account is best. For guaranteed returns, CDs or T-Bills are the strongest choices in 2025.
