Long Term Investments for the Future
Riswandi
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Long Term Investments for the Future
Santri Alat - Long Term Investments for the Future - A long-term investment is an asset you hold over a long period. However, the timeframe depends on the type of asset. For instance, some investments are considered long-term if held for one year or longer. On the other hand, some investments are long-term after having them for ten or more years.
If you are ready to invest money for a future event, such as retirement or a child’s college education, you have several options. You do not have to invest in risky stocks or ventures. You can easily invest your money in ways that are very safe, which will show a decent return over a long period of time.
First consider bonds. There are various types of bonds that you can purchase. Bond’s are similar to Certificates of Deposit. Instead of being issued by banks, however, bonds are issued by the Government. Depending on the type of bonds that you buy, your initial investment may double over a specific period of time.
Mutual funds are also relatively safe. Mutual funds exist when a group of investors put their money together to buy stocks, bonds, or other investments. A fund manager typically decides how the money will be invested. All you need to do is find a reputable, qualified broker who handles mutual funds, and he or she will invest your money, along with other client’s money. Mutual funds are a bit riskier than bonds.
Stocks are another vehicle for long term investments. Shares of stocks are essentially shares of ownership in the company you are investing in. When the company does well financially, the value of your stock rises. However, if a company is doing poorly, your stock value drops. Stocks, of course, are even riskier than Mutual funds. Even though there is a greater amount of risk, you can still purchase stock in sound companies, such as G & E Electric, and sleep at night knowing that your money is relatively safe.
The important thing is to do your research before investing your money for long term gain. When purchasing stocks you should choose stocks that are well established. When you look for a mutual fund to invest in, choose a broker that is well established and has a proven track record. If you aren’t quite ready to take the risks involved with mutual funds or stocks, at the very least invest in bonds that are guaranteed by the Government.
Long-Term Investments vs. Short-Term Investments
The main difference between long-term and short-term investing is the time they’re held. We know that long-term investments are generally held for ten years or more. On the other hand, short-term investments are usually held for one year or less, making them more of an active investment. Some investors hold investments for a few months at a time, while some buy and sell within a few weeks or days.
Short-term investments are generally riskier than long-term investments. This is because most short-term investors use volatile assets with prices that move quickly enough to profit within a brief period. That said, nearly any asset can be a short-term investment, but most have high volatility and liquidity.
On the other hand, long-term investments are held for much longer and are generally safer. Another difference is that long-term investments are expected to gain value slowly but predictably. As such, they’re better to hold long-term to allow them to grow as much as possible.
Luckily, long-term investments are generally passive, meaning you don’t have to do anything besides watch your investment grow. But, on the other hand, you much watch short-term investments closely and make moves at the right time to be successful.