When making any type of investment there are lots of important factors to consider.
You will need to decide whether you want to invest in short term or long term and also weigh up the safety of your investment, potential risk and growth. Safe, short term investments usually offer more protection but they don’t have much future potential, as opposed to long-term investments that can offer higher rewards but of course often come with higher risk.
Below are the most popular types of long term investment you could consider for your portfolio. These are a mixture of low, medium and high risk opportunities, but if managed correctly all can potentially provide high returns on your investment.
- Long-term bonds
- Mutual Funds
- Precious Metals
- Real Estate
- Retirement Plans
For most seasoned investors stocks are one of the most popular long-term investments. There are lots of advantages to investing in stocks. One of the most appealing advantages is that they are “paper” investments, which means you don’t have to manage anything. Your stocks price is influenced by the performance of the company you have invested in, it is a completely hands-free investment which can have very high returns.
When you invest in stocks, you are investing in real profit generating companies, essentially you are investing in the economy. The majority of stocks are liquid, which allows you to buy and sell them quickly and easily when you wish. You can spread your investment across lots of different companies and even invest internationally. Stocks often rise in value, especially over the long term. The average annual return on stock investments is 10% per year, making this investment opportunity highly attractive and a safer investment for your money
A long-term bond is a loan that you make to the government, company or organisation over a long term period. When you invest in long-term bonds you’re letting the bond issuer borrow your money and pay you back over time with interest. The longer the term of the bond, the more interest you’re likely to accumulate over time.
Bonds are usually considered as safer options than stocks, but often have a lower return, although, just like any type of loan if the issuer defaults you could potentially lose your investment. Government, city and state bonds are a much safer option as they are backed by the United States government and issued with full faith and credit, which essentially eliminates risk. There are so many different types of long-term bonds available but the above are considered the safest options.
A mutual fund is a professionally managed investment fund that pools money from lots of different investors to purchase securities. Investor types may be retail or institutional in nature. Stock mutual funds, especially growth stock funds and aggressive growth stock funds are suitable for long-term investment purposes.
Many long-term investors also like to use index funds for their low-cost and their tendency to average very good returns over long periods of time, such as 10 years or more. Mutual funds are generally considered a safe long term option as they are very diverse and made up of a number of securities which are often traded by the fund manager in terms of uncertainty.
ETF stands for Exchange Traded Fund. They are similar to mutual funds as they are single securities that hold a number of underlying securities. Just like index funds, ETFs trade a benchmark index such as the NASDAQ 100 or the S&P 500 Index.
ETFs can be a smart investment choice for long-term investors, which is another similarity to mutual funds. ETFs are simple and passive in nature and generally have lower expenses than mutual funds do. ETFs are also very tax efficient and prove highly effective as a long-term investment.
Precious Metals (Gold)
Investing in precious metals such as gold, silver and platinum is a great long term investment opportunity. You can buy physical gold from many reputable online dealers and it makes a perfect investment opportunity for people who prefer to be more hands on with their investments.
Gold has been a sound investment in the long term for many years. Short term gold prices are quite volatile, check out this calculator and you will see that gold prices have consistently risen year by year since the early 1900’s. Investing in gold is not for everyone, but if you are looking for a historically successful long term investment then investing in precious metals and gold bullion might just be for you.
Real estate is generally a great investment option. It can generate ongoing passive income and can be a good long-term investment if the value of your property increases over time.
You can use real estate investing in a variety of ways, whether you buy to let, use your property as an AirBnb investment or you hold on to your property and sell it at a later date, there is a lot of money that can be made in the long term. You may even use real estate investment a part of your overall strategy to begin building wealth.
There are a number of different types of retirement plans you can choose from. 401(k) plans and 403(b) plans that are arranged by your employer, or you could set up a traditional retirement plan or an IRA.
The good thing about retirement plans is they allow you to make a variety of investments which means you can really diversify your retirement plan portfolio. You can purchase stocks, bonds, funds and even gold. You also don’t have to pay any tax on your investment until you withdraw it In your retirement. Normally at this point you will also be in a lower tax bracket, so it’s win-win. The risks for the investments included in your retirement plan are the same as if you are buying the investments outside of a retirement plan, so bear this in mind when planning for the future.
Annuities are often used by people as part of their retirement savings plan. When you purchase an annuity you buy a contract with an insurance company and you are paid periodically either right away or from a specified future date.
Payments could last until you die or for a predetermined period of time only. If you are looking for a fairly low risk investment, annuities might be for you, although they are more of a supplement to your retirement savings as opposed to a main investment opportunity for high growth.
Robo-advisors, also known as automated investing services or online advisors use algorithms, AI and advanced software to build and manage your investment portfolio. Services range from automatic rebalancing to tax optimization, and require very little human interaction.
You can choose all types of investment with a Robo-advisor including long-term investment plans. Because your investment plan is completely managed for you and based on algorithms and big data, this kind of investment opportunity can be very lucrative over a long term period.
Cryptocurrency (High Risk)
Cryptocurrency investment should be considered as extremely high risk, but if you invest wisely the returns can be ridiculously high. For example, if you had invested $1000 in bitcoin in July 2019 and cashed out your investment in December 2017 you would be sitting on a return of $17 million!!!
However, Bitcoin and other cryptocurrency prices are extremely volatile, they can be easily affected by news, technology, developers and even by large cryptocurrency holders (whales) can affect the market by selling and buying large amounts of cryptocurrency at one time. That’s not to say cryptocurrency is is not a good long-term investment, just be very cautious when choosing which cryptocurrency to invest in. Research the cryptocurrency carefully and stay up to date with development news to ensure your investment is as safe as possible.
So there you have it, these are the best 10 long-term investments you should consider when looking for a long term investment to choose from. Of course, these are just options that are available to you and based on opinion only. Before making large, long term investments you should consider all options carefully and speak to your financial advisor. Did we miss anything? Let us know below if we missed any solid long term investment opportunities from our list.