The long-term vs. short-term debate has been going on for years. Both types of investment can work, of course; it’s a matter of preference. Here, we’re going to look at the benefits of short-term investment.
It’s less stressful
Short-term investing can get you quick wins, without a doubt. Long-term investors, though, don’t have the day-to-day worries. You don’t have to check the market three times a day or check your portfolio each morning. If you’re already pushed for time, long-term investment could be a better option.
It’s easier for beginners
You can invest without having to be an active trader. It’s as simple as meeting with your investment advisors and picking out a portfolio of businesses you trust. Then all you have to do is stick with them. Simple.
You can benefit from compounding
Over the long-term, compound interest can make a big difference to your investment. Even something like a 3% yield can double your money every 33 years or so in the right circumstances. Some people retire as millionaires due to compound interest, and you can too. Take compounding seriously and you can reap the benefits.
You’ll make fewer mistakes
No investors get it right all the time, but long-term investors are usually wrong less. If you stick with your portfolio over the long-term, you’ll often find you’re able to ‘ride out’ any errors. Strong investments will last through the bad times. Even if a few don’t, your others will often compensate.
It’s less emotional
Long-term investors don’t tend to make emotional decisions. If you’ve held onto an investment for twenty years, then a 10% jump in the market isn’t going to worry you. If you only bought the stock yesterday, it might. If you’re focused on long-term growth, you’re less likely to panic and sell (or buy) at the wrong time. You can take a more passive view on almost any jump or fall.
Both short-term and long-term investments can be beneficial. However, we hope this has helped emphasise what you can gain from taking a long-term approach. If you’re at all unsure about investing, remember you can always pick up the phone and give us a call.