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Comparing Short & Long Term Investments

Investment can be grouped into two major types which are; short term investments and long term investments. Both types of investments hold their merits and demerits which basically revolve around individual needs and expectations.[ad#ad-4]

The difference between both types of investment is that the short term investments tends to yield a higher returns in a short space of time but in some cases is riskier while the long term investment is designed to last a few years while gaining a gradual growth. A closer look at both investments types goes thus:

Long Term:

This type of investments spans into a few number of years and the returns are gradual but harbours less risk than the short term investments as mentioned above. This investment type is suitable for someone who is investing for retirement or child’s college fee or some other project that will not require the cash anytime soon.

Short Term:

The major advantage for this type of investment is the potential to realise huge returns in short space of time, but take heed that this same advantage is where the major disadvantage stems from. There is a huge risk to your investment amount as majority of the short term investments that bring about high yields carry high risk as well.

When compared to its long-term equivalent, this kind of investment could easily be affected by erratic conditions because it is in a shorter phase of time.

So, generally speaking long term investment is only suitable for the investor willing to give the invested amount some years before he can see reasonable returns while short term is for the investor who wants quick returns with the willingness to take higher risk.

Written by: Ginny Fairham

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