Planning your investments according to the need is the most important investment advice you can receive. If you have a short term need, such as one where the money is necessary within a three-year period, you’ll want different investments than you’d have for a long-term need that takes place 20 years in the future.

Short term needs require two things when you invest. Liquidity when you need the money and safety. Since you only have a limited time, higher risk investments that fluctuate dramatically can go down and not recover in time for your specific goal. This means you find another way to finance your project, either often costing you in interest payments, or selling your investment for a loss.

Those who seek investment advice find that stocks are not the way to invest for a short-term goal. No matter how stable the company seems, the stock price will fluctuate with market conditions. In a bad economy, the drop can make a difference between a profit and a loss.

Bonds with a maturity date set within your period can provide one means of financing a need that is short term. Don’t be fooled into thinking a traditional bond fund will do the same. The bond market rises and falls just like the stock market. However, a short-term bond fund, filled with bonds that mature within a year, often has little fluctuation and offers a higher rate of return than traditional savings. Be aware of the load if you invest in a short-term bond fund. The load can erode any gain you might see. Some funds offer a reduced load or no load if you leave the funds for at least a year. Other no load funds don’t have the peril of higher charges.

Money market funds are also another way to achieve higher returns without the risk associated with stocks or other types of investments that fluctuate in price. You’ll never make a 20 percent return on your money but you will often receive a higher return than you’d get in a savings account. You can also find money market accounts with tax-free instruments if you’re in a higher tax bracket. Since the returns are tax-free, they’re often lower so make sure your tax bracket is high enough to offset the loss of return if you use a tax-free money market fund.

Shorter term CDs are also great ways to invest if you have a short-term goal. Be aware there’s a difference in bank CDs and brokerage CDs. The principal on bank CDs don’t fluctuate, while the brokerage CDs vary just like stocks and bonds. Often, brokerage CDs are longer term and if you select one that comes due within a year, it probably will be stable. Even though the return on a brokerage CD looks better, consider all costs of the purchase before you make your final decision. Ask for investment advice from someone you trust before investing into any product you don’t understand.

Short-term notes can also be another good investment for goals that occur in less than three years. Short-term notes are often under a year and of several different grades. If you want safety, look for those with the highest credit rating. If you want a higher return, you can purchase those with a slightly less than the best rating, but be aware, the lower the rating on the note, the higher the risk.