December 5, 2018

Long term Vs. Short term investments

We often like to ask ourselves, why people invest. The truth is that achieving financial growth is every individual’s desire, which in many cases, fuels the motivation to maintain healthy investments. For an investor, the ability to factor time as a huge determinant to financial growth is very crucial. For example, the end goal for a particular investment plan could be “I want to save for retirement” or “I need to get married”. While one requires a long-term investment, the other requires a short-term investment.

The real question is what defines long-term VS short-term investments? We did a quick analysis:

 

Long-term Investments Short-Term Investments
Hold for more than three years and are usually carried out for a future goalHold for 3 years or less
Provide relatively higher stability and usually leads to reaping your estimated returnsMore prone to risks, as market changes can lead to the prices of stocks nose-diving
Helps save commission costs from active tradingCommission costs are recurrent
The risk is low even when the market is bearishThe more the risk, the more returns yielded in a case of market stability

In essence, the more money one puts to both vehicles of investments, the more you move closer to achieving your desired goals. However, what is important to note is that they have clear differences, and knowledge of each can help one have an idea what to expect and make the right choices. Before you start investing, whether short or long, the first step is to have clear goals in mind.

So which investments are better? They both have their benefits. The key is realising your goals, and adapting them to your investment choice. It is also necessary to diversify your investments – which means you can have a mix between long and short, each fulfilling a set goal. So be it long or short-term investments, FBNQuest Asset Management drives you on a journey to wealth. Take advantage of our expert financial advice today.