What is Short Term and Long Term Investment?

Short Term and Long Term Investment

A1 Intraday tips provides Best Intraday tips for day traders. We also provide short term as well as long term tips to traders / investors. We at A1 Intraday tips has tried to explain the meaning of the term, short term & long term investment.

Short term Investment

Short term Investment means investor buys the stock /security for minimum 3 months to 4 months or for less than one year to earn good profits from the investment done. Short term investment also known as temporary investments and Investor can easily be converted to cash in quick time.

Following types of Best Short Term Investments that are very popular in the market.

• CDs - Certificate of Deposits : Banks pay a higher interest rate on CDs, as depositors invest their cash in investments for three and five years.
  
• Money market accounts : The money market refers to trading in very short-term debt investments.
  
• High-yield savings accounts. : Yes Bank (7%), Kotak Mahindra, Indusind Bank (6%) offer pre tax returns better than others on their savings accounts subject to minimum balance requirements
  
• Government Bonds : If you're looking for a high-yield short term investment, Government bonds are the best forms of Investments.
  
• Treasury bills : Treasury Bills are short term (up to one year) borrowing instruments of the Government of India
  

The Advantage of Short term Investment

• Short-term investing offers flexibility and the investor has not need to wait for the Mutual fund / security to mature in order to get cash.
  
• Some time Investors can make fantastic profit in short time with small amount of capital.
  
• In Short term investment, risk factor is very low means very low chances to loose whole capital .
  
• Short term investor get the benefit of Flexibility and Diversification.
  

The Disadvantage of Short term Investment

The main disadvantage of short-term investment is that it's not always possible to earn profits in a short period. There are chances that investments done for short term, may fall in the short term but give the profit in the long term Investment. Another disadvantage is the Inflation in the economy, that can rise above the returns generated by Short term investments.

Long term Investment

Long term investment can be defined as a any Investment done by Investor in to for minimum 1 year and generally intend to hold that for long term like several years and expect a good returns from it in the future. Due to any Global impact like Corona Virus, if your returns on Mutual investment take a downfall, you can add some more investment to your existing investments. This will give good returns over a longer period of time. The following elements are for the long-term investments to get best returns.

• Investment in Stocks is long-term investment
  
• Long-term Bonds
  
• Mutual Funds
  
• ETFs (Exchange Traded Fund)
  
• Real Estate Investments
  
• Tax Sheltered Retirement Plans. ( Pension Scheme)
  
• Bank Fixed Deposits/ Post office time deposits
  
• ELSS (Equity Linked Savings Scheme)
  
• Investment in Metal like Gold, Silver etc
  
• Public Provident Fund
  
• National Pension Scheme.
  

Advantage of Long Term Investment in the Stock Market

• It's easier as you can invest and relax.
  
• Investor will save money and tax too.
  
• Investor has low risk compare to short-term investing.
  
• Investor is tension free as its very safe.
  
• No need pay more Commissions.
  
• History is on your side, as Long term investing is always profitable.
  
• Helps diversify your portfolio.
  
• Dividends received will get multiplied.
  

Disadvantage's of Long Term Investment in the Stock Market

The main disadvantage of long term investment is in case of any emergency, this investment cannot be converted easily to liquid cash. Though there are some long term investments that can be converted in to cash, but with a risk of significant loss to your savings.

We have already discussed some best investment options both Short terms and long terms investments as above. If you want to make best investment, you must have a proper understanding of the different types of investment options available in the market. The purpose of the investment may vary depending in terms of financial objective, time period, risk levels, etc from person to person. To get required returns on your investment you must select the best option after a thorough research of the investment options and your financial goals.