The time has finally come to ship the kids off to college, which means it's also time to scramble together money for tuition, dorm costs and books. Enter the lure of investing, where money hopefully begets money. For parents who want to generate extra income to ease college costs, it may be time to put together a short-term investment portfolio for the next six to 12 months. Short-term investing is all about minimizing the downside because you don't have that longer time horizon to smooth out market bumps, says Neal Frankle, president of financial planning firm Wealth Resources Group. "If you take a huge risk, the return could be great, but you could also lose 10% if the capital goes against you. That could make a huge difference in your money, and you won't have time to offset the loss," Frankle says. That means you shouldn't attempt to jump in and out of stocks. But you can park your money in investments that will help generate extra income to pay for costs ranging from cafeteria plans to tuition over the next year. Here are five ideas, from mild-mannered to higher-risk, for the college parent's short-term portfolio.
Though its yield might not pay for much more than a semester of books, the money market fund is the go-to option if for investors who want extra income with the least amount of risk. Peter Crane, president of money market and mutual fund research firm Crane Data, notes that while there are funds and bank savings accounts that both yield more than 5%, money markets can offer more flexibility than high-yield savings.