Pros & Cons of the 3 Long Term Investments – Stocks, Real Estate & YOU
There are short term investments that most people opt for since the results are fast.
But on the other hand there are long term investments that don’t yield results fast. But waiting and having patience will generate a lot of income in a couple of years, if not months.
But what can you invest for the long term?
The importance and benefits of investing are becoming more and more widespread and fortunately more and more people are making the wise decision to save and invest especially during Covid. And in this article, we will talk about the pros and cons of three long term investment strategies.
Long-Term Investment Options
Investing in the long term has many advantages depending on what you invest in.
Let’s review in broad terms what benefits an investment of this type entails. And then analyze in detail three of the most important strategies, with their pros and cons.
1. Stock Market
Stock market is the buying and selling of stocks, private or public bonds among many other investment instruments. It works through the free market and depends on supply and demand. It is considered to be the most profitable investment strategy provided what you invest in and when and how much.
There are three fundamental concepts that you should be aware of in order to succeed in the stock market:
- Seller: Individual or company that sells its shares or securities.
- Buyer: Individual or company who buy those shares or securities.
- Fluctuation: The rise or fall of prices in response to supply and demand.
Today, venturing to invest in the stock market is extremely easy. Thanks to different programs, simulators and courses, which makes possible for anyone with available capital to successfully enter this strategy.
- Easy access: Technology now allows you to interact with the exchange, even from your cell phone.
- High profitability: The profits surpasses over returns from fixed income instruments which hardly offers good interest.
- Diversification in your favor: Thanks to the great amount of options and companies in the market, it is possible for you as an investor to expand your investment portfolio, reducing risks of loss and increasing profits.
- Low risk of fraud: Control entities regulate the stock market, reducing the possibility of fraud or finding unreliable companies.
- It is not for everyone: It may sound contradictory. But it is imperative to clarify that if you venture without sufficient 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 it is necessary to emphasize that you will need patience to see results and in financial matters it can often be quite a challenge.
- It is not tangible: At times, many people may find it a bit uncertain and may be uneasy not being able to see their profits in a concrete way and to base them on expectations.
2. Real Estate
It is the best known and therefore most used long-term investment strategy. Sooner or later we end up participating in this investment product, either as a lessor or a lessee.
- Little information: It is enough to investigate a little bit to know if a house, apartment or place can be rented or sold at a good price.
- Very profitable: In most 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.
- Huge investment: Requires a strong initial investment.
- Procedures and documents: Buying a property and renting it implies different expenses. In addition to the cost of the apartment, you will have to invest in legal procedures and contracts, which are necessary to protect your investment.
- Maintenance costs: Every property suffers 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 area, amenities, among others.
- It does not run alone: It requires you to dedicate time to it 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.
3. Investing in Yourself
You might be thinking, what is this?
But investing in yourself is the best long-term investment anyone can make.
Following shortlisted items definitely requires attention. And each individual should consider these as an investment strategy.
- Education: Make sure you are a lifelong learner. No matter how much you have studied or how many degrees you have accumulated. There are countless areas of growth that you can explore to diversify your horizons as much as possible.
Listen to this inspirational speech by Indra Nooyi (former CEO of Pepsico) on being a lifelong student –
- Health and Wellness: Don’t make the mistake of ignoring your health or the importance of staying in the best possible shape. Don’t wait until you lose your health to start valuing it.
- Learn Special Skills or Develop Hobby: Learn to cook, record a video, start a blog, take a course in social networking, learn to program a computer, etc. Bottomline is not to stop. Look for your personal growth.
While there are no specific cons for this third investment strategy, it is important to note that it requires a lot of self-discipline, focus and dedication. You will need to take charge of getting trained and stay on track.
Long-term investments may seem complex and complicated, but many times they are not. In addition, it is a fact that this type of investment provides higher returns than those with short-term horizons.
The ideal is to check your needs and budget before choosing the long-term investment that suits you best.
Hi, I am Nikesh Mehta, owner and writer of this site.
I’m an analytics professional with a deep passion in writing; especially in finance and related topics. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business.