There are short-term investment strategies for which the majority choose if they want to have results as soon as possible, but there are other long-term investment strategies that although it will not give them to you in a couple of days, waiting and being patient will generate a lot of income in a couple of months or years. But where can you invest in the long term?
You have decided to invest: excellent news! The importance and benefits of investing are increasingly widespread and fortunately more and more people are making the wise decision to save and invest. Today we will talk about the pros and cons of three long-term investment strategies.
We imagine you at a point where you have already gone through the process of deciding why and what you want to invest for. If after calmly reviewing your goals, the advantages and disadvantages of short-term and long-term investments, you decided that what is best for you is the second option, read on, because this article interests you.
Long-term investment strategies
Investing in the long term has its general advantages. Let’s review in broad strokes what benefits an investment of this type entails, and then analyze in detail three of the most important strategies, with their pros and cons.
- Maximum benefit to compound interest.
- Reduction in operations, commissions and taxes.
- Decision making to a minimum.
- Prevention and early solution to problems.
- It is much simpler than short-term investment strategies.
We already know, you came to this article with the conviction of wanting to invest in the long-term; we just wanted to remind you of some of the benefits. Now let’s see what to expect from each of the three main long-term investment strategies.
Three main long-term investment strategies
Of all the options that exist in the market and the different projects that we could present to you, we choose the three best known strategies, since we trust that the greater access to information, the greater your chances of success and greater prospecting of customers.
1. Stock Exchange
In a nutshell and not to give it many laps: the Stock Exchange is the purchase and sale of shares, private or public bonds among many other investment instruments. It works through the free market using a dynamic supply and demand. It is considered the most important investment strategy.
There are three fundamental concepts that you should know to understand more easily how to succeed in the Exchange …
- The bidders: company that sells its shares or securities.
- The plaintiffs: those who buy such shares or securities.
- The fluctuation: the rise or fall in prices in response to supply and demand.
Today, venturing to invest in the stock market is no longer so complicated, thanks to different programs, simulators and courses; it is possible that anyone with available capital can successfully enter this strategy. It all depends on resources and knowledge.
- Easy access: Technology now allows you to interact with the Exchange, even from your cell phone.
- High profitability: Even surpassing profits that fixed income instruments would hardly generate.
- Diversification in your favor: Thanks to the large number of options and companies in the market, it is possible that as an investor you will expand your investment portfolio, reducing risk of loss and increasing profits.
- Low fraud risk: Supervisory entities regulate the stock market, thus reducing the possibility of fraud or encountering unreliable companies.
- It is not for everyone: It may sound contradictory, since we have just said that anyone can do it, but it is imperative to clarify that if you venture without enough information, without a timely analysis and without a clear strategy, you will only get losses.
- They are not immediate: It seems almost absurd to clarify this point, since it is a long-term strategy, but we believe it is necessary to emphasize that you will need patience to see results and in financial matters, it can often involve a challenge.
- It is not tangible: At times, many people may find it somewhat uncertain and generate concern not being able to see their earnings concretely and based on expectations.
We can ensure that it is the most well-known and, therefore, the most widely used long-term investment strategy. Sooner or later we end up participating in this dynamic, either as lessor or lessee.
- Little information: It is enough to investigate a little to know if a house, apartment or premises can be rented or sold at a good price.
- Very profitable: In the vast majority of cases, the investment will increase over time.
- It is tangible: Unlike the stock market, in this investment strategy it is much easier to visualize the progress of the investment.
- High investment: Requires a strong initial investment.
- Procedures and documents: Buying a property and renting it implies different expenses that you must contemplate. In addition to the cost of the apartment, you must invest in legal procedures and contracts, which are necessary to protect your investment.
- Maintenance costs: Every property undergoes wear and tear over time that must be taken care of so that it does not lose value. This expense may vary depending on many factors such as the use of the property, the area, construction material, among others.
- It does not march alone: It requires you to spend time at different times.
- Lack of liquidity: Your capital is there, but you will not be able to dispose of it in case of an emergency.
No, we are not inventing it, nor do we want to make it happen as an easy way out. Investing in yourself is the best long-term investment you can make. Right now, we give you a brief list of items in which you should pay attention and develop yourself as an investment strategy.
- Education: Make sure you are in constant training; no matter how much you have studied or how many degrees you have accumulated. There are endless areas of growth that you can explore to diversify your horizons as much as possible.
- Well-being: Do not make the mistake of minimizing your health or the importance of staying in the best possible state. Do not wait to lose health to start assessing it.
- Special skills: Learn to cook, to record a video, to program an Internet page, take a social media course, learn sign language, and take an electricity course. Do not stop, try your personal growth.
PROS & CONS
While we do not identify specific pros and cons for this latest investment strategy, it is important to note that it requires a lot of self-discipline, focus and dedication. You must take the reins of your training and make sure you stay on track.
Long-term investments may seem complex and complicated, but often they are not. In addition, it is a fact that these types of investments provide higher returns than those of the short-term horizon.
Ideally, verify your needs and budget before choosing the long-term investment that suits you.
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