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When it comes to investing, it can be difficult to know if you should make your money work hard for you in the short term, or if it’s better to put it into a more lucrative long-term investment.
On that note, let’s take a look at short-term and long-term investments and ascertain which is better!
What is a Short-Term Investment?
A short-term investment is an investment that takes a short period before reaching maturity. Most of the time, short-term investments are easily transferable and can be liquidated promptly if the need arises.
The time frame for short-term investments is usually less than a three-year period. Liquidity means that an investment can easily be converted into cash.
Examples of short-term investments include money markets, day trading stocks and treasury bills.
To determine whether a short-term investment would suit your situation, you have to consider factors like your income, cost of living, dependants and tax.
And if you find yourself struggling to do that, then it would be best to draft up a list of questions for your financial advisor in order to get clear-cut financial advice tailored to your situation.
Advantages of Short-term Investments
Speed
One of the advantages of short-term investments is that profit can be accumulated in short periods of time and you do not have to keep funds tied up in one investment for a long period.
For instance, if you invest in a short-term play, you can typically make your money back (and more) in mere weeks and months if things go well, as opposed to years with long-term investments.
Flexibility
Short-term investments are flexible meaning that investors can liquidate their investments easily before they fully pan out.
Short-te… Read More
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