Published On: Tue, Dec 12th, 2017

Long Term Vs Short Term Investments

Investing your money is the easiest way to secure your financial future. If you let it stagnate in a savings account you’ll see a small return but nothing significant. Investing can be risky but if you get it right, it can also sort you for life. There’s one big question that people have about investing; should you go for long term investments or short term ones? Most people think that short term means quicker results but less return, while long term means waiting longer for a bigger payout. There’s a bit more to it than that and people choose between the two based on a lot of different criteria. To help you make sense of it all, here are the benefits of long term and short term investments.

 


Benefits of Long Term vs Short Term Investments

Long Term Vs Short Term Investments

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Short-Term Investments

The main reason that people are attracted to short term investments is because of the quick turnaround. You can see your money grow in months, weeks, or even days. The other main benefit is that you have a bit more control over your money in a lot of cases. You can buy stocks and then sell them a couple of days later and you’ve got that money back into the bank, ready for the next investment. It means that if you change your mind on an investment, you don’t have to wait years before you can get out of it and put your money elsewhere.

However, it’s not all good news with short term investments. The biggest problem is the risk involved. The stock market is very volatile and the price of stocks can drop rapidly. If you’re investing short term and a stock price drops suddenly, you’re out of luck. There is always the chance that those prices will shoot up but the risk goes both ways. Short term investors tend to lose more large sums of money than long term investors do.

 

Long-Term Investors

Long term investments are generally much safer than short term ones, especially if you avoid the stock market. A gold-backed ira that puts your money into gold instead of stocks is far safer because, although the price might move up and down from time to time, it won’t be anywhere near as volatile as stocks. The same can be said of investing in property, which brings us to the next benefit.

Long term investments like property can be used to create a constant income stream which is often more beneficial than the occasional windfall that you’ll get from short term investments. You’ll see a steady growth on long term investments and you don’t need to worry about market fluctuations as much. If the price of a stock drops, it’s not a huge problem if overall trends are going up. But if that was a short term investment, you’d be in big trouble.

If you need a quick turnaround then short term investing is a good choice, but only if you can afford to lose that money. If you’ve only got a limited amount of cash to invest, it’s better to go for lower risk long term investment options.

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