Short term vs. Long term investments.

Investment strategies come in all different forms but they all generally fall into one of two categories - long term and short term. Let’s dive into the risks and benefits of both and see which one is right for you.

Short term investments are usually held for no more than a year, often much less than that. They offer a chance for significant profit quickly but they require a lot of attention. You have to make sure you do your research and try to time price movements accurately enough, so that you maximise your returns. This can work but you have to be prepared to take on a significant amount of risk. Even if you try your best to stay ahead of market movements, they are very difficult and sometimes even impossible to predict.

Long term investments on the other hand are usually held for years, even decades, and offer a much larger opportunity for correction. This means that if the market is experiencing a temporary down-swing, your investment has the time to recover once market conditions are favorable once again. Given the fact that the stock market experiences growth every decade, even every year, despite recessions, it is likely that your investment will prove profitable over time. Although they potentially bring lower returns, if you factor in the significantly reduced risk, long term investments could be the more profitable choice in the end.

The type of strategy you choose depends on the type of investor you are. If you want a quick way to generate profits, short term investments might be a better choice for you. If you are looking for stability and long term growth for the future, you might decide to stick with your investments for the long haul. Whatever your choice may be, make sure you stay informed of both the risks and benefits involved.