Which Type of Investment is For You?
When you decide to join the world of investing, there are a lot of factors that you need to consider and think over. Aside from the where you would like to invest and the amount of valuables you are willing to risk, you also have to consider which type of investments you want to pursue. Yes, there are different types of investments that you can gauge and consider.
There are two types of investments done in the trading market. These two major classification falls under short term investments and long term investments. If you find yourself more confused in choosing which to choose among these two types of investments, simply be aware of the differences and the pros and cons and you will be on the right track.
Basically the major differences between these two types of investments are that short term plans are designed to show a substantial return in a short period of time. Long-term investments meanwhile, are investments designed to last for a few years or so and present a slow, steady progressive increase in its yields.
With the main difference between these two types of investments stated, the disadvantages and advantages of each should also be known and weighed.
The first of the two types of investments is short term investments which has great potentials of growth and increase in value over a very fast period of time ranging only from a few weeks to a few months. Although it might face the challenges of fluctuations trends in the market, short term investments still allows more personal control since it is likely that you will be the one to keep an eye on your money.
Its weakness meanwhile is it will prove to be riskier due to the shifts in an unpredictable market. Compared to its counterpart, this is more prone to volatile circumstances because of its lifespan. So even if the chance of greater yields is aimed for, there are also greater chances of risks that you lose a lot of money.
Long-term investments on the other hand provide steady and reliable yields for the future retirement years. It gains small and distributed profits over a longer period of time. Thanks to its slow-but-steady pace, it is seen to be a lot stable and it involves lesser risks along the way too.
One disadvantage though of long-term investments is since profit cannot be expected right away; this particular investment will not be an option for you if you are in dire need of money during emergency situations. Aside from this, it would be expected that you would have lesser control over your money because the maturity date of your investment is not immediate. Also, it would be expected that there are fees to be paid while the investment is making its way to its maturity date.
Knowing the major advantages and disadvantages between these two types of investments would be the first step so you can make the right decision.