Long Term Investment Basics
by Andrew Walker, 2007-01-10 18:05 (Business and Finance)
The purpose of long term investment is to meet future needs such as retirement, children’s education etc. Unlike short term investment, which aims to gain profits in a shorter period of time, long term investment often use the “buy and hold” strategy, based on the concept that in the long run equity markets give a good rate of return despite periods of volatility or decline.
For long term investment, there are a number of ways to invest your money.
Bonds are the first option. Bonds are similar to CD, but are issued by the government instead of banks. There are various types of bonds available to be purchased. Depending on which kinds of bonds that you invest in, your initial investment might double over a specific period of time.
Mutual funds are another popular choice for long term investment. A mutual fund is a form of collective investment that pools money from many investors and invests their money in stocks, bonds, short-term money market instruments, and/or other securities. A fund manager typically decides how the money will be invested. All you need to do is find a qualified broker who manage mutual funds and invest your money, along with other client’s money. Mutual funds are a bit riskier than bonds.
You can also invest in stocks for long term investment. Shares of stocks are essentially shares of ownership in the company you are investing in. When the company does well financially, the value of your stock rises. Please remember that stock is even riskier than Mutual funds.
For long term investment, you should always do your research before making investment decisions. When purchasing stocks you should choose stocks that are well established. When you look for a mutual fund to invest in, choose a broker that is well established and has a proven track record. If you aren’t quite ready to take the risks involved with mutual funds or stocks, at the very least invest in bonds that are guaranteed by the government.
Andrew Walker has written financial articles for websites such as 101bankruptcy.com ( http://www.101bankruptcy.com ) and Debt Consolidation Guide, etc.
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