The Three Year Investment Plan: How to Make Money in 3 Years

Category: Finance & Money 47

A three year investment plan is considered fairly short-term, as are most investments under five years. It ties up your money only for a short period of time, but would typically pay out less in interest than if you kept it locked in for longer. Three years is a great amount of time for people who are expecting to make large purchases in the near future, or who don’t know if they are willing to lock away that money for a longer period of time.

There is no point in having money that sits around and does nothing. Learn about the different ways in which you can invest your money so that it multiplies when you aren’t using it. Three year investment plans are an important way to plan for the future, a future that isn’t so far away.

1. Chequing account

A chequing account is a possible start for your three year investment plan, although it isn’t ideal. The reason is that the interest is typically extremely low, and there are often fees that need to be paid, in order to keep the account open. The benefit to investing money in a chequing account is that it can always be accessed very easily. However, that feature does make it easier to just spend it.

2. Regular savings account

This is also not a preferred method for three year investment plans, because of the low interest levels, savings accounts do typically offer higher interest than chequing accounts do. The funds in a savings account are also liquid, which is good for situations where the money needs to be accessed quickly.

One major drawback of using a regular savings account is that, as with the chequing account, it may be too easy or tempting to access that money.

3. High-interest savings account

A slightly better option for investing money in the short term is a high-interest savings account. This is still a low-risk savings option, as with the chequing and regular savings accounts, but it offers a higher rate of interest.

Due to this benefit, there are often minimum amounts that must be kept in the account at all times, and there may be a more time consuming process for requesting money, instead of just transferring it over, as with some other accounts.

4. Tax free savings account

A tax free savings account allows you to keep the interest you earn from your savings, without having to claim it as taxable income. Some tax free savings accounts offer different interest rates and different levels of risk depending on your preference.

In a three year investment plan, tax free savings accounts do still offer pretty liberal levels of liquidity, however they usually require the account holder to contact the bank in order to transfer the funds over to a chequing account, if needed. The extra step required to access the cash is better, as it stops the account holder from using that money for impulse purchases.

5. Guaranteed Investment Certificate (GIC)

A 3 year GIC would be a great investment option as it leaves a lot of decisions up to the investor. GICs can be set for different amounts, at different periods of time, and may offer different rates of interest. They can pay out interest at different intervals – including monthly, yearly, or at the date of maturity, and are an extremely low-risk method of investment.

The shortest term for a GIC is six months, and long-term GICs run up to 10 years. The drawback of this type of investing is that if you need to access your money before the date it matures, you will have to pay a fee.

6. Government bonds

Individuals can purchase government bonds, which is essentially giving the government a loan of whatever amount the bond is purchased for. These are considered the safest method for a three year investment plan. It is guaranteed by the federal government that the investment will be repaid upon maturity, and that a guaranteed rate of interest will be earned for that term.

7. Term deposits

Term deposits can be made for either the short or long term. Short term deposits are anywhere from 30 to 364 days. Long term deposits are anywhere from one to five years. They offer both liquidity of funds and a guaranteed interest return.

8. Ladder investing

People often invest their money using a method called ladder investing. This means investing money that will mature at different times. So, for example, an individual may invest $500 that will mature in 6 months, another $500 that will mature in a year, and $1000 that will mature in three years.

This means that the person will often have money maturing and becoming available to them, so all of their cash isn’t locked in for long periods of time. Once money matures, the investor can choose to re-invest some or all of it to keep the cycle going.

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