Long-term investment vs short-term investment: which is best?

Here, we look at both long-term and short-term investments and weigh up the advantages of each.

It makes good sense to have an investment plan in place to safeguard your future and provide opportunities to grow your wealth. You may be investing for the long-term or short-term; the following discussion looks at both forms of investments and weighs up the advantages of each.

Long-term investments

Making long-term investment decisions means tying up your money into investments of one kind or another. You may opt to buy shares on a regular basis and hope to benefit from share price growth and dividend income, for smaller short-term gains. It’s always wise to look into all the financial implications of share buying to make sure this is the right type of investment to meet your needs.

A long-term housing investment can be a very wise financial decision to make. You will benefit from residential property, which can be used to provide your main home. Alternatively, you might choose to rent out your property which will give you immediate rental income and should also be available over the long term.

Despite crashes in the price of houses over the past 20 years, the overall price trend has still been upwards. It’s also predicted that house prices will have grown by 56 per cent by the year 2027. What’s more, it’s reckoned that the average price for a home will hit £346,592 by 2027, which is good news for canny property investors who bought homes for around £50,000 in the 1990s. This phenomenal growth prediction is one of the reasons why it’s a good idea to consider long-term housing investment as critical to your future plans for growing your wealth.

Short-term investments

Again, short-term investments could well be money that’s steered towards shares and financial markets. Indeed, anyone fortunate enough to invest in Bitcoin before 2017 could well be a millionaire at this point in time, but there’s no certainty in planning short-term gains from investments in financial markets, and hanging on to shares when they start to drop can result in massive financial losses.

Building on from the idea of putting money into a long-term housing investment, let’s look at the benefits of investment in short-term property deals. This type of property would likely be derelict, run down properties that require investment to renovate and put on the market. The only problem with this, is that investing this way usually requires a cash purchase to avoid loaning money on properties of that nature.

So making a quick buck from short-term property renovations is probably unobtainable for most people. Of course, if you found a property that required renovation and was manageable, you could spend your spare time doing the place up and hope to sell at a profit.

However, how you use your profits is important. Take the idea of short-term investment into property renovations one step further, and consider just how much money an investor might be likely to make if they held onto the renovated property for the next 10 years, using it as a rental property to gain regular income and then selling on in 2027 when property might have increased by 56 per cent. It really is a no brainer!

Investing for the longer term really does make good sense and a long-term housing investment can be the biggest investment you will ever make.

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