Deciding where and what to invest in can often be the most difficult part of investing. This is especially true for investors who may be struggling to pick between short-term investments and long-term ones.
Although short-term investments can net you returns faster, longer-term investments are less volatile and can even offer tax advantages when held longer. If you have goals spanning a few years, then long-term investments may be the best option. Below we’ve listed out a few of the best long-term investments and what they could mean for investors.
One of the most well-known and stable investments that anyone can make is, of course, real estate. Real estate can generate passive income in the short term, and generally increases in value over time. If you have a diversified portfolio, real estate can also help you lower volatility.
Generating income from real estate is pretty straightforward. Investors have the option of fixing up the property and renting it out or flipping it. In a previous Probate Leads article we described how flipping a property is a long process that requires some investment and thinking on your part. On the whole, however, it’s generally easy to get a good ROI on real estate whether you have short-term or longer-term goals for your investment.
Growth stocks require a little more work and experience on the part of the investor but promise great successes. Growth companies tend to offer innovative products and services. They are also able to ride trends in the market. These kinds of stocks are usually, but not always, tech companies.
These companies promise high growth and high investment returns but can be risky because investors pay higher for the stocks relative to the company’s earnings. Thus, there’s always a chance that these stocks will lose their value quickly during a recession. On the whole, however, growth stocks generally perform well and can be highly profitable if chosen correctly.
Exchange-traded funds, also known as ETFs, aren’t quite investments. Instead, they’re technically portfolios that contain a number of stocks and bonds from different sources. Because of this diversification, ETFs are generally less volatile and can perform better over a long period of time.
ETFs are lower cost investments but yield more if held for a longer period of time. Wealthsimple’s guide to gold ETFs is a good introduction to this type of investment. Gold ETFs are easier to manage than actual gold in terms of value and storage. Then can also take different tracks including gold futures and gold mining shares.
Compared with traditional mutual funds, ETFs offer a few more advantages that are beneficial for investors. They offer lower operating costs, more flexible trading, and better tax efficiency for taxable accounts. While ETFs do have downsides, such as trading costs, overall, they are a great option for long-term investing.
Investment practices adapt to the times and one of the options that has been gaining more ground over recent years is robo-advisors. Thanks to advancements in technology, we’re slowly realizing a more automated world that is made possible in investing through robo-advisors.
Robo-advisors are digital platforms that automate the investment process for you. These platforms use algorithms to determine the best investment path for your acceptable risk level, budget, and other factors. Insider Intelligence reports that robo-advisors could be managing up to $4.6 trillion by 2022.
While fairly new in the investment world, these advisors have been gaining ground in recent years thanks to their relatively low pricing and ease of management. At this moment, the technology isn’t the most sophisticated and is better suited to straightforward investments. With time, however, we could see robo-advisors taking on more complex work in the future.
While there are a variety of investment options available for you, if you decide to pursue real estate investment, our leads can help you find motivated sellers. Contact us today to learn more.