How can you invest money short term and safely?
For short-term and safe investments, the following four forms of investment come into question, for example …
- … overnight deposits,
- … fixed-term deposits with a short term,
- … money market funds or
- short-dated government bonds
For investors who have so far only used a current account or a savings book, overnight deposits and fixed-term deposits offer a particularly simple and safe entry into the world of investing. Both products are straightforward, transparent and protected by the statutory deposit guarantee scheme up to 100,000 euros.
If you are looking for a bit more return potential and are also willing to invest in stock-market products to achieve it, money market funds or – unless it is precisely the famous emergency fund – short-dated government bonds may be the right choice for you.
Overview: options for short-term investments
In the following table you can compare the earning potential, availability and safety of overnight deposits, fixed-term deposits, money market funds and short-dated government bonds with one another.
* As at: September 2025; average overnight deposit interest rate based on 100 offers according to tagesgeldvergleich.net, average fixed-term deposit rate based on the Bundesbank statistics for new fixed-term deposit business with terms of up to one year, money market fund return and return of short-dated euro government bonds based on representative ETFs that track the IBOXX Euro GERMANY 1-3 Index and the Markit iBoxx EUR Eurozone Index respectively, incl. ongoing product costs (TER) of 0.1 and 0.24 % p. a. respectively.
** Banks receive the European Central Bank's (ECB) deposit interest rate when they deposit money with the central bank until the next business day.
Note: In this snapshot, the return of short-dated government bonds may appear disappointing. However, owing to the somewhat longer terms and the slightly higher risk, the return expectations are generally above the expected returns of the other investment options listed.
And what about the savings book?
Savings books are not advisable for short-term investments. They are indeed considered very safe, but they hardly earn any interest – usually significantly less than, for example, overnight deposits. Often the interest rate is only just above zero, so that there are hardly any advantages over a non-interest-bearing current account. The risk that the return will be more than eaten up by inflation is usually particularly high with savings books.
Which short-term form of investment suits you?
Which option for short-term investing suits you best depends on
- when you need the money,
- how important immediate availability is to you and
- whether you are willing to accept small fluctuations in exchange for higher return potential.
To decide on one or more forms of investment, ask yourself the following questions:
When do I need the money? Is it just a few weeks (e.g. for a back tax payment), half a year (e.g. as a buffer before a move) or rather one to two years (e.g. for a planned car purchase)?
How important is it that I can access it immediately? Do I need to have access to my money at all times, or am I willing to “lock it away” for months if I receive more interest in return?
What is more important to me: more return or more stability? Am I willing to accept possible price fluctuations if my money can gain more in value as a result?
1. Overnight deposits – the better savings book
An overnight deposit account (Tagesgeld) is an interest-bearing account at a bank into and out of which money can be paid at any time. It works similarly to a current account, but offers interest. The balance is available daily, hence the name “Tagesgeld” (day money).
Advantages of overnight deposits:
- The invested money is available daily, without having to observe any notice period.
- There are no price fluctuations. You get back exactly the amount deposited plus interest.
- Up to 100,000 euros per bank and customer, the balance is protected by law through the deposit guarantee scheme.
Disadvantages of overnight deposits:
- The interest rates are usually variable and can be adjusted by the bank at any time.
- Even with slightly higher inflation, the real value of the money can fall despite interest, because purchasing power decreases.
- Some banks offer attractive interest rates only for new customers, which are limited in time.
Overnight deposits are the ideal option if …
- you need your money in the next few weeks or few months, e.g. for a larger purchase or unexpected expenses.
- you want to save for a holiday, a wedding or other short-term events and want to remain flexible at all times.
- you sleep better at night when your money is not exposed to price fluctuations and remains available daily.
2. Fixed-term deposits – saving with a fixed term
With a fixed-term deposit you invest a certain amount for a fixed period, for example six or twelve months, at a fixed interest rate. During this time the money is not available to you. At the end of the term you get back the invested amount plus the interest.
Advantages of fixed-term deposits:
- The interest rate is guaranteed for the entire term. You know from the outset what return you will receive at the end.
- Fixed-term deposits are also protected up to 100,000 euros by the statutory deposit guarantee scheme.
- The interest earnings can be higher than with overnight deposits, since in return you give up flexibility.
Disadvantages of fixed-term deposits:
- With short terms the interest is usually lower than with terms over several years.
- During the term the money is not available. Early termination is usually not possible.
- Should market interest rates rise in the meantime, you do not benefit from it. The interest rate agreed at the beginning remains in place until the end of the term.
Fixed-term deposits are the ideal option if …
- you know for certain that you will not need your money for a fixed period, e.g. in the next 12 months.
- you prefer a stable, calculable return and do not want to concern yourself with interest fluctuations or stock-market topics.
- you receive a larger payment, e.g. after a property sale or a gift, and want to park it safely in the meantime in order to decide at your leisure what to do with the money next.
3. Money market funds – funds for comparatively safe, short-term investments
Money market funds, or money market ETFs, are investment funds that pool the capital of many investors and invest it in short-term, interest-bearing, relatively safe securities. These include, for example, short-term bank bonds or interest-bearing paper that is oriented towards the ECB key interest rate. The returns accordingly lie close to the ECB key interest rate, which usually means a higher return can be achieved than with overnight deposits or short-dated fixed-term deposits – while at the same time keeping the risk manageable.
Advantages of money market funds:
- Units in money market funds can usually be bought and sold on every trading day. This offers a certain flexibility.
- The underlying investments are considered very safe, which is why the risk is limited.
- Money market funds usually achieve somewhat higher earnings than classic savings products.
Disadvantages of money market funds:
- In contrast to overnight or fixed-term deposits, the value of a money market fund can be subject to slight fluctuations.
- The statutory deposit guarantee scheme does not apply, since these are fund units and not bank deposits. However, your money is protected as segregated assets in the event of the insolvency of the fund company. And also in the event of the insolvency of the custodian bank, the fund units remain your property.
- Fund management fees eat up a (small) part of the return.
Money market funds are the ideal option if …
- you want to achieve a bit more return than with overnight deposits and are willing to accept small price fluctuations in exchange.
- you want to park a sum of money short term and remain flexible in doing so.
- you already have a securities account (or want to open one) and are open to the return potential of the capital market.
4. Short-dated government bonds – lending the state money for a short time
Short-dated government bonds are securities with which states such as Germany, France or the USA borrow money for a certain time. When you buy such a bond, you lend the state capital and receive a fixed interest rate in return. After the term expires – usually a few months to two years – the capital is repaid in full. From a risk perspective, instead of a single bond it is advisable to buy a whole bundle, ideally with the help of low-cost ETFs.
Advantages of short-dated government bonds:
- Bonds from states with very good creditworthiness (e.g. Germany) are considered particularly safe because of solid public finances and thus a very high probability of interest payment and repayment.
- You receive a fixed interest rate and can plan exactly when and how much capital flows back.
- If needed, the bonds can be sold early on the stock exchange.
Disadvantages of short-dated government bonds:
- Selling before the end of the term can lead to price losses if the market value of the bond has fallen.
- The returns of safe government bonds are in part only marginally higher than with overnight or fixed-term deposits.
- The purchase is made through a securities account, which can be somewhat more complex for beginners.
Short-dated government bonds are the ideal option if …
- you are looking for a safe investment with a fixed term and regard the state (e.g. Germany) as a reliable debtor.
- you want to invest your capital in a plannable way for one to two years, for example as a reserve for a later larger investment (e.g. a property purchase).
- you do not want to be dependent on the overnight deposit interest rate and are looking for higher return potential.
Investing money short term with quirion
At quirion you have the opportunity to open, in just a few minutes, a classic overnight deposit account or a securities account with which you can invest in money market ETFs. Your money remains available to you at all times with the prospect of interest earnings and/or the return potential of the money market.
Opening an account with quirion is this easy:
Registrieren
Open an account
Deposit money
Claim your welcome bonus
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