Long-Term V/s Short-Term Stock Investment

Investing in stocks is by the most popular way for people to make money. However, this holds true for only those who are looking at long term investment. People with short term goals would not be able to witness returns which otherwise can very easily be experienced. What I mean to say is stocks are for those who plan to invest money and leave it standing for long durations so that they can mature overtime.

Honestly speaking, both long and short term investment are full of risks and there is no way to ignore them. This can be proven by the fact that a clear warning is given to the investor at the time of buying a stock that there is no guarantee that the money would come back. If someone gain high returns today does not take away the probability that he might suffer from heavy losses tomorrow. However, as far as long term investments are concerned, there are very few portfolios that have gone wrong. On an average, the returns have been around 5% - 10% which can be fairly high depending upon the total amount of money invested.

Short term markets are very risky simply because of the high volatility that the market goes through. What may be going up this instance may fall the very next instance. The only people who can expect to gain with a short term plan are those who have large amounts to invest, can dedicate themselves to looking at the figures at all times and have the required expertise to predict the future graph. Unfortunately, there aren't many amongst us who belong to this category and those who do are never available for advice. Even if they do give an advice, it is highly generalized which cannot be banked upon.

The next question is - what is considered to be short term and what as long term? Short term investments range to a period of a year to 5 years. While long term investments can go up to 20 - 30 years. If you would be requiring the amount saved up within a period of next 5 years, it is best to stay away from the stock market. Similarly, elders should stay away from the stock market as post retirement; they would require the money to meet their expenses. They may however invest in mutual funds or bonds that promise definite returns.

Market fluctuations can be pretty devastating (which could be seen during the recent recession) and cast dark clouds over all future plans. There are tons of opportunities to exploit and gain from but at the same time, there are many routes that only go towards losses. If you are aiming high, take the risk. On the other hand, if you are not willing to lose amounts, make a safe bet and invest in areas that are comparatively stable and low risk.

At the end of the day, it is you would have to make the choice and the onus of the results would also lie on your shoulders. Whether you want to come out laughing or in remorse is completely on the decision you make. As a final tip on investment, think before taking any step.