Short Answer 
Short-term investments, such as savings accounts, offer low risk and liquidity, making them suitable for immediate cash needs. In contrast, long-term investments provide higher returns but involve more risk and lower liquidity, ideal for individuals with a longer financial outlook willing to accept potential uncertainties.
Step 1: Understand Short-Term Investment Options
Short-term investments typically include savings and checking accounts. These options are characterized by their low risk and low returns, making them ideal for individuals who need accessible cash. The liquidity of these investments is high, meaning they can be easily converted to cash without significant loss in value.
Step 2: Consider Long-Term Investment Characteristics
Long-term investments, on the other hand, usually offer higher returns but come with increased risk and lower liquidity. This means that while there is the potential for greater profit, accessing that money may take longer and could involve some financial uncertainty. These investments are best suited for those with a more extended financial horizon and the capacity to absorb risks.
Step 3: Match Your Investment Choice to Your Needs
When deciding between short-term and long-term investments, assess your financial situation and future cash needs. If you anticipate requiring cash soon, opt for short-term investments. Conversely, if you can afford to wait for higher returns and accept potential risks, long-term investments may be more beneficial for your financial growth.