In the part one of this article, we explained in very simple terms what Short-term and Long-term investment is and in this second part, our focus will be to share with you what the differences between them are and which of them you should choose.
Differences between Short-term and Long-term Investments
In Short-term investment, there is more liquidity. This simply means that your money can be quickly and easily accessible. While Long-term has less liquidity, meaning that there may be obstacles to withdrawing your money or in other words, your money is not easily accessible or available to you.
In Short-term investment, there is less volatility. What this means is that the value of your investment is more likely to stay stable over time. However, in Long-term investment, there is more volatility which means, the value of your investments can change substantially according to economic conditions and other factors that affect it.
Short-term investments are easier to manage on your own without the help of a financial professional but long-term investments will most likely require active management by a financial professional.
Short-term investments may also have more flexible withdrawal options unlike Long-term ones that limit your options for penalty-free withdrawal (for example, retirement accounts that require you to hit a certain age before you can withdraw funds without a penalty).
Short-Term vs. Long-Term Investing: Which Should You Choose?
It is wise to have both short- and long-term investments that are matched to your goals so this is not a question of which is better than the other, it just depends largely on what your goals are.
It is necessary to stress that depending on your goal, being able to set some money aside to put into a money market account or any other form of investment account such as having an investment in one of our QG plans is a good idea if you plan to use the money for a project in a few years. However, an emergency fund which should be accessible immediately is better off in a high-yield or traditional savings account you can easily withdraw from. For long-term plans, allocate money to accounts like a brokerage account. Perhaps you plan to buy a house in 10 to 15 years, investing in brokerage accounts will be more suitable.
In a nutshell, choosing both short and long term investments are valid as you set your priorities and goals as long as you equally maintain a solid foundation of setting some money aside for emergencies too.
At quester gate, our plans are very secure and flexible and we help you do all the investing. All you will have to do is open your account, deposit your investment capital and watch your money grow.
Check out our juicy plans here and start your journey today.
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