While day trading can give you that adrenaline rush, it is risky business, and not particularly advisable for investors who don’t understand much about investing. Moreover, good investments accrue value over time, and if you want to gain significant returns, you will have to let your money sit outside of your direct control for a prolonged period.
So instead of falling for the hype of short-term trading, consider investing in long-term options that are sure to pay off well in the future. If you have surplus cash that you aren’t going to need in the near future, put it to work right away!
Here are 7 long-term investments you should be looking at.
Stocks
Purchasing stocks of a public company gives you a fractional ownership in that corporation and also represents your claim on part of its assets and earnings. Also known as shares or equity, stocks are of two types- common and preferred. The former entitles the owner to vote at shareholders’ meetings in addition to receiving dividends, while the latter has a higher claim on earnings sans voting rights.
Stocks come with an unusually high amount of risk as they are directly affected by company performance, economy, and politics. Despite this, stocks remain a great source of wealth and a lucrative long-term investment option.
Bonds
Commonly known as fixed-income securities, bonds are fixed income investments that allow government or corporate entities to borrow funds from investors at a variable or fixed rate of interest for a definite period of time. Rate of interest depends on the probability of repayment, so risky loans can get you a higher rate of interest.
Investing in bonds is less risky as compared to stocks, because bond value rarely fluctuates. That being said, investing in low-risk options also means smaller returns on investment. Nonetheless, bonds are a good long-term investment option that give you regular returns.
Mutual Funds
Mutual funds are just collections of stocks, bonds, and other types of investments that investors can buy and share in the profits. With mutual funds, you don’t have to bother with choosing the right stock as you stand to gain advantage from the overall performance of several stocks.
Mutual funds are either actively or passively managed, both offering investors protection against volatility. Diversification also means that investors bank on a sector or a company of a certain size, which makes for safer investing. What’s more, mutual funds are a cost-effective investment!
Exchange Traded Fund
An exchange traded fund or ETF is a marketable security that trades like a common stock on stock exchanges, undergoing price changes throughout the day. ETFs are similar to mutual funds in that hold a basket of underlying securities. However, compared to mutual funds, ETFs have lower fees and higher daily liquidity, making them an attractive investment option.
Though investors can take advantage of short-term price fluctuations, ETFs are also a smart choice for long-term investment and as holdings for taxable brokerage accounts.
Cash Equivalents
Cash equivalents are highly liquid investments and have a low risk profile. These assets can be converted into cash in a matter of a few hours or days. Considered to be the ‘gold standard’ for collateral, cash equivalents include assets like bankers’ acceptances, bank certificates of deposit, marketable securities, commercial paper, Treasury bills, money market funds, and short-term government bonds.
Cash equivalents have a stable rate of return, making them a good option for long-term investment. Do note that returns are low, so cash equivalents shouldn’t feature in your portfolio alone!
Real Estate
Real estate is a stable investment market and purchasing property remains a good bet for those looking to make profits over a period of time. There’s nothing too complicated about investing in realty either; investors only need to understand the types of properties and realize the earning potential of each before making a decision.
Investing in a rental property helps you cover a part of mortgage payments with rental income. There’s the prospect of property appreciation too! Commercial properties also offer a huge earning potential through rental income and future sale. Do invest in properties in up-and-coming areas, near universities, and in tourist hot-spots. You can even consider investing in real estate overseas.
Precious Metals
Investing in hard commodities like precious metals is a great way to diversify your portfolio. Precious metals, especially gold and silver, have intrinsic value, cannot be inflated, and carry no credit risk. Besides benefiting from inflationary protection, investing in precious metals allows you to harness their volatility and build your wealth.
Apart from purchasing your money’s worth of gold earrings and rings and silver bullion, invest in gold, silver, and platinum ETFs. You can also invest in futures and options, mining stocks and mutual funds, and certificates.
Conclusion
Investment options come with a certain amount of risk, but you shouldn’t let this fact stop you from putting your hard-earned money to use. While short-term profits are enticing, being patient and opting for long-term investments can prove to be the better option for building wealth and helping you live life to the fullest after retirement.
With this list of long-term investments, you can decide for yourself if you want to invest in high or low risk options. So build your portfolio wisely after understanding the basics well. Do take the advice of experts before investing!
