Investments are basically split into two, that is, short term and long term.
Understanding how these two categories of investments work can help you on your journey to being a real-time investor and in this part of this post, we will focus on explaining in basic terms, what short term and long term investment is.
What is a Short-Term Investment?
When you make a short-term investment generally, this simply means your plan is to have access to the money in less than 2-5 years. This investment method is set to protect your money from losing its value over a short period of time.
Note that your money will be safer however, you won’t notice a lot of growth as a more risky investment vehicle might provide. In other words, short-term investment is a type of investment that you do over a short period of time; say between two to five years with low-risk capability and moderate returns.
Examples of short-term investments are investments that are highly liquid, that is, investments that you can cash in easily. They can include traditional or high-yield savings accounts, money market accounts and short-term certificates of deposit (CDs).
What is a Long-Term Investment?
A long-term investment deals with higher-risk choices because your money has more time to grow after incurring losses within this period. In most cases, making a long-term investment means you don’t have any plans to access the money for up to 10 years or more and it’s that simple.
Some types of long-term investments are stocks, longer-maturity bonds and mutual funds—or a group of investments, Exchange-traded funds (ETFs) which are another type of investment that includes groups of stocks or bonds but can be traded more often than mutual funds, Real estate investment trusts (REITs) which are also long-term investment options that allow investors to put their money into real estate projects that will most likely produce returns (just like buying shares from a stock company, you can buy REITs from real estate companies too).
It is good to also note that an average consumer can protect themselves against some of the ups and downs of long-term investing by contributing to a brokerage account regularly, no matter what the current state of the market is projecting.
Here at questergate, we have just the right plans for you to begin your investment journey today. See all the juicy details here.
See also: steps to becoming an investor for beginners.
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