5 Top Long-Term Investments To Know

You shouldn’t let cash sit idle. Over time, it will lose its value if it isn’t invested in places, especially where the wand of compounding is swung. But, all investments are subject to market risks, and it is natural for anyone to think multiple times before considering an investment. 

We’ve been so used to traditional investments such as fixed deposits that our risk appetite isn’t very admirable. That being said, there’re several ways in which you can invest without having to worry too much. A note of caution, however, you’ll have to be consistent and behave rationally in times of poor market conditions. 

Now, without further ado, let’s take a look at what options you have for long-term investments. 

1. Index Funds

The stock market has historically shown promising results in the long term. Unless you aim for short-term trading, investing in stocks for the long term is considered a less risky bet. But there’s a catch that makes all the difference. 

The game is based on what stocks you choose. And remember that all stocks are not equal. Some are solid and less wayward. These stocks are often considered to represent the financial health of the market. And there are some who may be defensive and, perhaps, more vulnerable but highly growth-oriented. 

In such a case, you may want to diversify the portfolio, and an Index Fund is all you need. Unlike an actively managed mutual fund, an Index Fund is passively managed and tracks a stock market index such as S&P500. It invests the funds across all the securities and tries to match the returns offered by the index under the scanner. 

2. Real-estate 

Real estate is seen as an asset and as an accomplishment. Property has always been a subject of intense excitement, dispute, and value since time immemorial. So, expecting it to invite as much attention as it did before is natural. You won’t get immediate returns. It will take years before you make significant profits. But the returns are good if you keep at it.

Today, there are several options to invest in real estate. You can purchase a property and put it on lease for residential or commercial purposes. But, if you don’t want to manage properties, you can consider investing in Real Estate Investment Trusts (REITs) whose managers invest funds across properties. 

3. Bond Funds 

I believe you must’ve heard of corporate or government bonds. If you don’t know what they are, here’s a simple central idea of what they are all about. A bond fund can be a mutual fund or a bond Exchange-Traded Fund (ETF). In this type of fund, the issuer issues a bond whose owner (investor) receives interest annually. 

These bonds are time-bound; the expiration of the time period results in the principal amount being repaid and the bond being redeemed. This is preferable for those who don’t want to analyze individual bonds and create a diversified portfolio. They are subject to fluctuation but are usually stable. Specifically, government bonds are considered safer than corporate bonds. 

4. Dividend Stocks 

If you want to take risks, you may want to invest directly in dividend stocks or stocks that give dividends. Dividend stocks are known for their robust footing but may not rise as fast as growth stocks. However, what stands them out from the rest is the dividend factor. Older and mature companies with less need for funds give out regular cash. 

Such stocks are an excellent choice for buy-and-hold investors, especially those who are young or nearing retirement. However, in comparison to other stocks, they are less risky. 

5. Cryptocurrency 

Of course, accounting for the crazy last year, cryptocurrency has lost its steam lately. You may wonder whether they should occupy a place in your portfolio. The answer is it depends. Cryptocurrency is a highly volatile asset with no dependable measuring stick. This means their value can shoot up or shoot down, even in unexplainable circumstances such as a tweet. 

Unless you have a high-risk appetite, don’t go forward with it. But, if you do, allocate some space for crypto in your long-term investment plans. Hold on to them for the long term, and perhaps, you’ll know whether you made the right bet. 

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