The trick to knowing how to earn high interest on your money is really a question of how much risk you are willing to take and how much time you are willing to wait for your returns. People with large short-term needs will obviously have to be willing to take on greater risks than those people with a longer investing time horizon. Here are a couple of options to think about when planning to do with funds that need to remain liquid.
How to Earn High Interest on a Short Time Horizon
There are very few solutions for people looking for a quick fix to earning additional yield on a short-term deposit. In those cases where the money has to be available right away or on a day's notice, the only options are your higher yield money market and or savings accounts (note: online banks pay better rates). There really isn't a lot to be done to get funds working for you at a higher rate of return because of the liquidity issue (ie needing to be able to access you money quickly). If you have even a slightly longer investment horizon more alternatives present themselves.
How to Earn High Interest on a 2-3 Month Period
Once you step outside that initial level of account where funds are immediately available, earning potential increases quite a bit. Although your local bank honestly won't have anything decent to offer in terms of term deposits (CDs, or certificates of deposit), most online banks will have something nice to offer with an attractive yield. Your choice then becomes one of selecting from one of the many online offers and being prepared to wait it out without touching those deposits for the term of the investment. Most people are looking for how to earn high interest on either short deposits or these slightly longer ones. People with an extended investment horizon may have an even better (albeit riskier) alternative.
How to Earn High Interest with an Extended Investment Horizon
People with an undefined time horizon to invest cash have many more alternatives to just simple deposit accounts and CDs. There is of course the option of using a longer period CD (which locks up funds for a longer time but does pay significantly high rates - at with online banks). There are some riskier alternatives, but in those cases it can take a greater length of time to cash in earnings but the payoff can be more than worth it. Investors willing to take on significant risk can learn how to earn high interest to the tune of 5% using an advanced investment position called the carry trade.
For the vast majority of people looking to earn high interest an online banking account will be the best and safest choice. People with a greater risk appetite and the willingness to wait for their investments to pay off might well try a carry trade investment to take advantage of interest rate differentials between countries.
For more information, please visit: High Yield Money Market