Short-term investment is also known as temporary investment. It can be a debt or equity security which the investor can sell or convert into cash in a period of 3 to 12 months. Short-term investments are holds to earn quick returns. Two main requirements of short-term investments are � They must be easily and readily convertible to cash. Short-term investment is considered liquid so whenever the investors decide to sell they do not find any difficulty to sell it because buyers are available all the time. � It must be sold within one year Some examples of short-term investments are � Money market � Certificate of deposits � Treasury bills � Government bonds Short-term investments are designed to provide considerable returns in a short period which can be from few months to a year. Stocks and bonds which can be liquidated quickly are considered short-term investment options. On short-term investments, companies and individuals can earn higher interest than a savings account.