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Short-term investment options for your business

Posted on: April 10, 2012 | Author: ATB Business & Agriculture

If your bank account is a little fuller than usual and you want to use that money wisely, a short-term investment account may be the quick (and smart) solution. By parking your money in an accessible account, you can earn interest while you plan for your next big business project, whether it’s expansion, diversification, or succession.

Here a run-down of the most popular accounts, from most accessible to least accessible:

  • T-Bill Account

    A T-Bill Account is similar to a savings account in that you can access your money at any time, for a small fee. But T-Bill accounts generally feature higher rates of return, allowing you to grow your money faster than with a traditional business savings account.
  • Cashable GIC

    A GIC (Guaranteed Investment Certificate) is an investment that offers a guaranteed rate of return over a specific period of time. Cashable GICs usually feature one-year terms, but you aren’t punished if you redeem after only 90 days. For example, at ATB the rate for a one-year Cashable GIC is 1.0%. If you keep it invested for the full year, you receive 1.0%—but if you redeem it after three months, you also get the full rate.
  • Non-Redeemable GIC

    With a Non-Redeemable GIC, you must commit to a term and cannot withdraw your money early. In most cases, the longer the term, the better your rate of return.

    With some Non-Redeemable GICs, your rate also depends on how interest is applied and payable. It’s a bit of a trade off: if interest is payable monthly or quarterly, your money will compound faster but the bank will offer a lower rate of return. On the other hand, if your interest is payable annually, your money will compound slower but you’ll receive a higher rate of return.

When choosing a short-term investment account for your business, it’s important to find the right balance between growth and accessibility. Think about your needs—now and in the next few years—and talk to your business banking manager. They can help you find the account that’s best for you.

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