Long Term vs. Short Term
Long Term investments are those that mature over a longer period of time. Most of these are safe investments, but you have to wait years for a return. If you have a small amount to invest, look into short-term investments. Keep the cost low to increase the odds of a greater return. Use only 5-10% of your capital for "risky" investments.
Limit your foreign investments to 20% or less. Some investments are short-term as you can buy and sell these over a shorter period of time. There is no time limit on when to invest and when to sell. That is up to you.
1. REITs or Real Estate Investment Trusts may be a good long-term investment. Also investing in your own home through renovations/additions will bring good returns for the future. (More info on the reit.com official website)
2. Treasury Inflation-Protected Securities are long-term investments that have a fixed interest rate. The amount of the principal fluctuates with the value of the dollar, but TIPs should be worth as much or more at maturity as when the investment was made.
3. Municipal Bonds are often a safe investment. They are tax-free and may earn 4% over a 10-year period. Essential services bonds such as water/sewer service are better risks than special project bonds. (More info here)
4. Saving Accounts, Government Savings Bonds, and Certificates of Deposit (CDs) are safe long-term investments. The interest on a savings account is usually low and takes years to get a good return. Government Savings Bonds will pay a decent interest rate, but you must leave it for the 10-year life of the bond to accumulate the face value. CDs have a better interest rate, but you can only withdraw in 5-year increments. You can also invest in foreign Certificates of Deposit.
5. Dividend Stocks in S & P 500, in their top 100 dividend stocks, have been up from 8.8% to 12.5% over the years. Getting advice from your broker or advisor helps to make the best investments.
6. Health Care and Consumer Staples are a good investment. With the cost of medical care continuously increasing, even your own health insurance is an investment.
7. Index Funds are good for an investment of a few hundred dollars. They are good investments for smaller amounts as they have a low transaction cost, and low management fees. Large-Cap Stocks have been undervalued over the last year. For example, the S & P 500 index for large companies was up 24%, while S & P Small Cap index was up 35% in the same period. (Here is a more comprehensive look)
Large-cap investments would be companies like Proctor & Gamble, GE, United Health Care, WalMart, Kohl’s, Home Depot, and Hershey's. Small-cap investments would be companies like Game Stop and Netflix that are newer and smaller companies. The investment potential is there. Using a Discount Brokerage Account will allow you more control in what you buy and sell. You will pay a commission for each trade made on your account.
8. Commodities include raw materials such as oil, gold, and agricultural products. The prices of these items have raised considerably over the last few years. Invest in a wide diversity of commodities such as mutual funds, or exchange-traded funds. You should limit your investments in commodities to 10% to 15% of your total investment capital.
About the Author: E. M. Fortie writes for the financialadvisorcareer.net Financial Advisor Career Blog his personal hobby blog he uses to help people gather all the info they need about becoming a financial advisor and find out what are the best degrees online.
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