Smart Short Term and Long Term Investing Tips

Post recession, as vulnerable financial institutions have grabbed federal aid to save their businesses from bankruptcy, most of the investment options no longer look safe. Interest rates have fallen, investment bankers and stock traders are being held for fraudulent practices; the list is unfortunately long. In the present financial situation, you may be wondering how to find safe and reliable options to invest your hard earned money.

Before you make any investment decisions, you need to assess your finances carefully. Identify your goals and start researching on sound financial options to achieve those goals. You should also talk to a financial adviser or a money management expert to understand what these options are.

Investment opportunities vary in terms of both returns and risk. Classify your choice of investments on the basis of duration, the amount of risk that they involve, and the potential returns that they can offer. There will almost always be a strong correlation between these factors. An investment strategy that works well for most people is to put some part of their money in a long term, low-risk, low-return investment and the remaining in a short term, high-risk, high-return investment.

Long term investments

Use a larger portion of your funds to invest in long term options like real estate and retirement funds. The real estate market is on its way to a slow but sure recovery. Several moves by the present administration show evidence of ongoing efforts to stabilize the market and to provide easier terms for mortgages. As lending rates are close to an all time low, now may be a good time to buy a home.

You also need to start building your retirement fund, which has a two-fold advantage. It will be tax free and you would get regular cash flow when you no longer draw a steady income.

Short term investments

Mutual funds and the stock market are the most popular choices when you are looking for higher returns on short term investment. You can contact your local bank to find out which mutual funds are available and if you can sign up for a stock trading account with them.

Remember that the suitability of funds depends on the investors’ needs, so try to understand the investment strategy of the fund before you opt for it. An advantage with mutual funds is that professionals with the right expertise manage your money and your risk is lower because of diversification.

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