The forms of investment are extremely numerous, and each of them may be more suitable for a given investor. Before taking any action, it is worth remembering to thoroughly familiarize yourself with the mechanism of a given financial instrument. So what can we invest in short-term and long-term?
Short-term investments are those that allow you to earn money in the shortest possible time. However, quick and big profit is often not the same as high safety of transactions. In some cases we can even talk about an almost gambling risk. What types of short-term investments are most often chosen by investors and what is worth knowing about them?
Short-term investments require from an investor both knowledge and experience. Therefore, in most cases we should also calculate possible losses into the costs of investment. The longer we trade in a given investment environment and the more we know about it, the better our chances are of generating the desired earnings in it.
Forex and binary options
The Forex market is developing rapidly in Poland. More and more investors are eagerly exploring its secrets. The number of those who are successful in this field is also growing. Forex has an advantage over other types of stock market investments because of the multitude of financial markets available in one place. With the help of the global web it brings together financial markets from all over the world and gives traders the opportunity to use multiple trading platforms simultaneously. Binary options can also be an alternative, which are much easier to learn.
Social lending can be both a long and short term investment. In fact, it depends only on what conditions the borrower presents to us – because he indicates what his financial possibilities are. The high-risk loans are usually those on which you can earn the most in the shortest time. However, if we care about safe and stable growth, we can expect about 10% profits from investments per year.
Similarly as in the case of Forex, this type of investment was created in connection with the development of the global Internet. Social lending became popular on the Polish market as a result of the financial crisis in 2008, when banks began to “tighten their belts” and not so willingly give various types of loans. The credit conditions also worsened, and this in turn left a space in the financial market that could not remain unfilled for long.
Cryptocurrencies can be used for both savings storage and investment. One example is Bitcoin, which has become so popular in recent years that some stores also offer to purchase items through it. The main advantage of cryptocurrencies is that no financial institutions or governments are privy to how much anyone owns unless you yourself disclose this information.
Cryptocurrencies can be an extremely lucrative investment, but unfortunately quite risky. Bitcoin has seen quite a bit of fluctuation in its value over the past few years – both on the plus and minus side. It’s also hard to predict the exchange rate, as they don’t depend on any other financial markets.
There are two types of bank deposits. Depending on which bank product you choose, you can expect to make a profit on this type of investment in a relatively short period of time, or much longer. Bank deposits start with ones for 1 month and end with ones where our money is frozen for as long as 2-5 years (or more).
Despite the fact that they are very safe, we cannot expect to earn the proverbial coconuts by investing in this type of financial product. The profits we get will only help us protect our hard-earned money from inflation, and not really multiply it.
Long-term investments allow investors to earn a return on their investment after a longer period of time. What is a short or long term return on investment for everyone is quite an individual matter. Hence many inaccuracies can occur in this area. It is also often the case that one type of investment can generate both long- and short-term profits. Examples of this type are stocks and bonds, deposits, social loans, as well as cryptocurrencies. What to invest money in?
When investing in mutual funds, you should set yourself up for a profit in the long term. Although there are also products available on the market that allow you to invest in funds for a short term, professionals warn that the potential rate of return may not cover the costs associated with managing your capital. Earning money on short-term ups and downs can bring big profits, but can also generate equally big losses.
For most investors, it’s recommended to invest in funds that are at least 6 or even 12 months old. Before committing to a particular investment, it’s always a good idea to check the long-term performance of the company in question, which will allow you to forecast profits and losses.
Shares and bonds
By purchasing shares we become a co-owner of a given company. This gives us the opportunity to participate in the profits, but also in the losses of the company. With a bit of luck and knowledge of the market, we can count on substantial profits when buying shares.
Bonds are a safer form of investment. By purchasing them we become a creditor of the company, which allows us to gain profit, no matter what results the company has recorded. If we care about constant and safe growth of capital, it is definitely more recommended to invest in bonds.
Your own business
A very interesting idea for investing money is also setting up your own business. It does not have to be connected with very big expenses at once, because many ideas can be realized with a really small financial outlay, and as time goes by – you can invest larger amounts in the development. When deciding on your own business, you should first think carefully about which idea can work, so as not to expose yourself to unnecessary losses.
Since money is just paper and does not have the value to be exchanged for gold regardless of the situation and financial arrangements, our financial security lies in the way we invest our hard earned money. Having free money, it is worthwhile to be interested in various forms of its multiplication.