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Morningstar Solutions
Save for Your Short-Term Goals
Slide 2: Save for Your Short-Term Goals
Short-term goals would be defined as those objectives you need to meet over the next few years. Whether you're considering a new home, a big trip, or saving for a new roof, Morningstar can help you research the potential investment vehicles that can help you reach your goals. Following is a short overview on the investment options that are suitable for your short-term needs. You can also visit our Investing Classroom to learn more about investing for your short-term goals.
Slide 3: Save for Your Short-Term Goals
Checking and savings accounts are two of the most convenient ways to set aside a portion of your liquid assets. Besides offering quick access to your funds, these accounts are also generally FDIC insured for up to $250,000 per institution (you can visit for additional information). The trade-off, however, is that your interest return may be very low. If you are hoping for some growth on your funds, versus straight preservation, you may need to look elsewhere.
Slide 4: Save for Your Short-Term Goals

Money market deposit accounts typically pay a higher rate of interest than might otherwise be earned in a checking and/or savings account. The interest rates on money market deposit accounts are not static, but rather pay interest based on fluctuating market rates. These accounts also have higher minimum balance requirements and offer a limited number of monthly transactions.

This type of account is more suited for someone who invests money for a longer period of time rather than someone who needs this money to pay bills on a regular basis. Lastly, like checking and savings accounts, up to $250,000 per institution will be insured by the FDIC.

Slide 5: Save for Your Short-Term Goals

Money market funds are similar to mutual funds and are typically very liquid investments typically used as an alternative to bank accounts. Even though these investments are not FDIC insured, they are known to be relatively safe. However, during the financial crisis of 2008, a well-known money market fund "broke the buck," meaning that it lost value.

The SEC recently enacted new consumer-protection regulations, such as requiring money market funds to hold at least 10% of assets in cash or highly liquid securities, such as Treasuries, that can be converted to cash within one day. Additional regulations have also been enacted by the SEC in response to the recent financial crisis designed to make investing in these financial vehicles safer than in the past. You can learn more about money market funds by clicking here or watching the related video below.

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Slide 6: Save for Your Short-Term Goals
Another option for short- to intermediate-term savings is a certificate of deposit. Also known as a CD, these investments require you to deposit a sum of money for a specified period of time at a particular, static interest rate until the CD's maturity date. You will be obligated to pay a penalty for withdrawing funds in advance of the CD's maturity date, so it is important to keep this risk in mind before committing. However, for those who can commit to the tie-up of funds, rates on CDs may be higher than other short-term savings vehicles. Similar to the checking, savings, and money market deposit accounts, certificates of deposit are also insured up to $250,000 by the FDIC.
Slide 7: Save for Your Short-Term Goals
Short-term investing is a critical part of your financial planning to enable liquid, unrestricted access to some of your assets. But as good practice, make sure you monitor the percentage allocated to this part of your portfolio because there is always the risk that inflation could rise to a level that could outpace the funds' returns, thereby eroding the purchasing power of your money.

Watch the below video for insight on comparing cashlike investments and squeezing extra yield from your cash reserves.
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Accompanying Video
Save for Your Short-Term Goals
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