Short term investment options for your business

Everybody knows that people investment in certain things so that they can see a return on their money; basically they are trying to save money and make money for some point in the future. But what many of you may not realize is that businesses also invest their money in things for the same reasons. But the difference between individuals and businesses is what the businesses invest in, sure they invest in stocks and bonds, but what you might not know is that the way they go about investing their money is quite different from how regular people invest their money.

Here is a look at some of the short term investment options for your business.

Number one:
A great choice for businesses is the capital market. The capital market is a type of financial market, it includes the stocks and bonds market as well. But in general the capital market is the market for securities where either companies or the government can raise long term funds. One way that the companies or the government raise these long term funds is through issuing bonds, which is where a person buys the bond for a set price and allows the government or company to borrow their money for a certain time period but they are promised a higher return for allowing them to borrow the money, the higher return is paid through interest that accrues on the money that the government or company borrows.

Number two:
Another great investment option for businesses is the money market, in the form of money market accounts. Basically the money market is the global financial market for short-term borrowing and lending and provides short term liquid funding for the global financial system. The average amount of time that companies borrow money in a money market is about thirteen months or lower. Some of the more common types of things used in the money market are certificates of deposits, bankers' acceptance, repurchase agreements and commercial paper to name a few.

Number three:
Another great option for business investments is derivative securities. But what you need to know about these types of investments is that there are basically two different types of securities and regardless of which type of security your business chooses they both have plenty of benefits for your company. The two types of securities are:
- OTC or over the counter derivatives - these types of derivatives are contracts that are traded and privately negotiated between two parties directly, which means that they are not done through an exchange or an intermediary. The types of products that you will see in this type of derivatives are swaps, forward rate agreements and exotic options.
- Exchange traded derivatives - these types of derivatives are products that are traded through specialized Derivatives exchanges or other exchanges. These exchanges act as an intermediary to all related transactions and takes initial margin from both sides of the trade to act as a guarantee.

But something that you need to keep in mind when it comes to choosing the best short term investments for your business is that some of your short term investments can actually be turned into long term investments. Basically the difference between short term and long term investments is that short term investments are investments for a period of one year or less. And when it comes to long term investments they are investments that are over one year and usually last longer than five years. So even if you are thinking of short term investments you need to keep in mind the differences between the time frames of the investments, not just the type of investment you are making.