Short-Term Monetary Assets

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on March 29, 2023

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Short-term monetary assets are assets that can be liquidated within 90 days.

These assets typically produce a small return on investment, but their liquid nature makes them an attractive place to store cash that you may need in the near future.

Examples of Short-Term Monetary Assets

Some common short-term monetary assets include:

Savings Accounts

Savings account interest rates are often lower than other financial investments. However, savings accounts are usually insured by the FDIC and therefore have a small risk of default.

Money Market Accounts

Money market account interest rates are typically higher than savings account interest rates since they require a minimum amount to be deposited into the account each month.

Certificates of Deposit (CDs)

CDs offer higher interest rates than savings accounts and money market accounts, but you can't withdraw them until a certain time period has passed.

Treasury Bills

These are debt obligations issued by the federal government with less than one year remaining until maturity.

Commercial Paper

Commercial paper is debt issued by companies with less than 270 days remaining until maturity.

Short-term monetary assets are attractive to some investors because they provide liquidity and low risk, but their returns on investment rates can be significantly lower than other financial instruments.

Why Is It Important to Have Short-Term Monetary Assets?

Having access to short-term monetary assets is important because you never know when you will need to quickly liquidate an asset in order to pay for recurring expenses, unexpected financial emergencies, or life's many curveballs.

Why You Should Invest in Stocks, Bonds, or Mutual Funds

If you are interested in maximizing your returns on investment, stocks, bonds, or mutual funds may be the best short-term financial instrument for you.


Stocks are commonly thought of as risky assets that provide high returns over time.

However, through careful analysis of the stock market and individual companies, investors can make informed bets on specific stocks, diversify their investments over many stocks, and still provide reasonable returns given the short time period.


Bonds are another asset type often thought of as risky. However, bonds are less risky over shorter periods of time because you know how much you will get back when the bond matures.

Mutual Funds

Mutual funds are groups of investments that allow investors to hold assets in a variety of categories. For example, you can invest in a large-cap stock mutual fund or an international stock mutual fund.

By diversifying over many asset types and geographical regions, you can reduce your risk even further while still providing a reasonable return.

How to Make Your Investments Work for You

By understanding all of the different types of short-term investments, you can create a portfolio that works best for your needs and provides the best returns. In order to do so, you should

  • Determine the amount of risk you are willing to take on
  • Research different types of risks and returns associated with stocks, bonds, mutual funds, etc.
  • Decide how much money to invest in short-term financial instruments
  • Evaluate your portfolio periodically for performance

For example, if you decide to invest in a low-risk money market account but it is down 12% this year while the stock market has gone up 6%, you may want to reevaluate your choices. Once you are confident that your new portfolio will work well for you, stick with it.

How Do I Know What Is a Good Return on Investment for My Money

There is no set answer for what a good return on investment is. You should determine how important it is to you to earn the most money possible in the shortest amount of time and then compare all of your options accordingly.

For example, if you need $2,000 in three months, it may be worth it to you to put your money in a low-risk investment and the return is lower because you will need the money soon.

On the other hand, if you have several years before needing the funds, you probably want a higher return on your investment

Tips on How to Invest Wisely

While there is no right or wrong way to invest your money, here are some tips that may help you make wise decisions.

  • Be wary of high returns without high risks
  • Do not put all of your eggs in one basket; diversify with short-term investments, long-term investments, and
  • Make sure to invest in assets you understand
  • Keep all of your receipts for short-term investments. This will make it much easier when you need to factor these into your taxes.
  • Do not put money toward anything unless you fully intend to follow through
  • Talk to a financial advisor.

The Bottom Line

Short-term monetary assets are assets that produce a small return of investments yet are liquid in nature.

For example, these assets include money market accounts, savings accounts, and certificates of deposit.

These assets are much less risky over short periods of time because you know how much return you will receive at the end.

Stocks, bonds, and mutual funds are examples of long-term financial instruments that can be used for short-term investments as well. They are usually riskier but offer a higher return.

It is important to have a diverse portfolio of investments and not just rely on one type. For example, if you place all of your money in stocks but the stock market goes down, you will lose money.

Short-Term Monetary Assets FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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