Long Term Investment

There are many persons that run towards stock investment as a means to make some quick money. This is perhaps however not the best investment option for persons with short term rewards in mind. The best option when thinking of investing in stocks is if you are interested in accumulating funds over a long period of time. One such example is the investment for future needs such as a nest egg for retirement and so on. If you are ready to invest money for a future event, such as retirement or a child’s college education, you have several options. You do not have to invest in risky stocks or ventures. You can easily invest your money in ways that are very safe, which will show a decent return over a long period of time.

First consider bonds. There are various types of bonds that you can purchase. Bonds are similar to cumulative fixed deposit. Instead of being issued by banks, however, bonds are issued by the Government. Depending on the type of bonds that you buy, your initial investment may double over a specific period of time.

Mutual funds are also relatively safe. Mutual funds exist when a group of investors put their money together to buy stocks, bonds, or other investments. A fund manager typically decides how the money will be invested. All you need to do is find a reputable, qualified broker who handles mutual funds, and he or she will invest your money, along with another client’s money. Mutual funds are a bit riskier than bonds.

Stocks are another vehicle for long term investments. Shares of stocks are essentially sharing of ownership in the company you are investing in. When the company does well financially, the value of your stock rises. However, if a company is doing poorly, your stock value drops. Stocks, of course, are even riskier than Mutual funds. Even though there is a greater amount of risk, you can still purchase stock in sound companies, such as constituents of reputed indexes like S&P, Sensex, Nikkei etc, and sleep at night knowing that your money is relatively safe.

However, in terms of long-term investment, it is shown according to statistics that there are no 20-year portfolios that have lost on the stock market. The average returns have averaged about 10 percent and these accounts all have a broadly diversified portfolio of stocks.

A good rule is that if you are going to need your funds in the next five years then stay away from stock investment. If the funds being used are for retirement investment then being an active trader is also not recommended.

The important thing is to do your research before investing your money for long term gain. 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.