A Guide To Short And Long Term Investments
Short Term Investments
If you’re investing for short term savings, it may be that you want to use the money for a down payment on a house, you may want to pay off credit card debts, or a school loan, so you may want to seek out ways where you can focus on short term goals such as building up your savings. Short term investments can be a savings account, CDs, and 529 plans. The goal with short term savings is to get the highest interest rate with your money.
While you’re focusing on savings and short term investing, be sure that you pay attention to your credit card debt as high interest rates can eat at the extra money you could be using for your investments. It might help to switch your credit cards over to a card that has a cheaper interest rate. That way you are paying less and you’ll have more money to allocate towards your short and long term savings goals.
Resources that Can Help
For starters, there are a few key areas that you can tap into. Look for books and information by authors such as Suze Orman, David Bach or Robert Kiyosaki because these are top investors who are very good at helping you to better understand short term and long term goals, and they can help you with investments and planning for the future. They have a plethora of information online, on Facebook, that can help with all types of savings goals and investment plans. Another key point is that with these authors and investors, they have proven ways that can help you tap into ideas about savings that you may not have considered, and will help you invest for the long haul.
In relation to short-term goals, you have to think about how you want to make your investments. If you’re investing because you want to save, then consider putting your money into a savings account that will help to build up your short-term capital.
Paying Off Bills
You may want to factor in the type of bills that you have. If your goal is short term investments for a down payment for a house, or maybe you want to pay off student loan debts or a credit card bill, you’ll want to find out what the exact amount is that you’re going to need and then factor in how long it’s going to take you to save towards that to help you achieve your goals.
Some people want to invest in stocks for short term gains because they think they can put their money in right away and double it, but this isn’t always a sound investment because you don’t always know what the stock market is going to do. With so much volatility in the market, you want to be careful with your money and not get caught up relying on stocks that sound like a sure thing or might be an overnight money maker. That overnight hunch more than likely may fail and you may end up losing your money in the process. Even if a friend tells you about a hunch, go online and research it first.
With your short term goals, factor in that anything that you invest in should be FDIC insured, that is Federal Deposit Insurance Corporation, to make sure your money is safe. Keep in mind that the FDIC sometimes only insures up to $100,000 or $500,000 depending on the type of account you’re using.
For short term investments, look for savings bonds that will mature over a set period of time. If you factor in a period of time like a year, this can give you a little extra money and will be higher than a CD. If you can wait longer, you may have greater savings once it reaches its maturity date. If you’re only hoping for a six month investment, consider CDs.
Investing in CDs
Another short term investment that you may want to think about is CDs. Certificates of Deposit don’t always give the best interest rate because they’re not really as strong as they were years ago, but if you do a search online you may find that you can tap into an online bank where you can get a better interest rate. Just make sure that is a reputable organization and that they have FDIC insurance. To find the best online CD rates, you can go to a site like Forbes, or do a search for ‘Best CD rates’ and you should be able to find a site that will give you a breakdown of the top banks, the highest rates and how to open an account.
If you are thinking about mid to long term investment goals, you may want to tap into a 529 plan where you can put money away for your child’s education, as you’ll be putting your money away for a set number of years. Stockpiling a small amount of cash over time, especially if you don’t pay attention to it coming out of your paycheck, can add up over the years and you can have enough money to send your child to college, or add an addition to your new home if they decide they don’t want to attend.
Long Term Investments
For longer term investments, you may want to look for stocks and bonds that are a little bit less volatile in the market. This is where you may want to check sites like Seeking Alpha and Bloomberg to help you understand what a particular stock is doing. Keep in mind that when you read articles from brokers, that they may have a position with that particular stock, so you may want to check at the end of the article to confirm this.
If you’re looking for stocks that may be less volatile, consider dividend stocks such as Pepsi, Procter and Gamble, and other top companies that are paying out dividends. Companies do this when they are a mature company and have been around for a number of years. They know that they’ve made sound investments and one way to distribute their proceeds is to give out dividends. When you have a dividend stock what ends up happening is you can take the dividend from owning the stock and reinvest it. This may be a small amount of money such as a few cents to a few dollars, but as you reinvest, it will help with compound interest over time.
To find more information on ways to invest in stocks for short and long term growth and dividend stocks, be sure to go to reputable sites that will give you sound investments based on what all market indexes are doing. That way your results will be unbiased and it won’t be from a company trying to promote only their stocks or a company where they hold a position and will gain from your added investment. For articles and help with stock investing, seek out top finance articles from companies like Fortune or Money Magazine.
Real Estate Investments
Other non traditional ways of making investments include purchasing a property and flipping it over. Sometimes people will do this for a short term investment where they make small minor repairs and try to flip it to get a profit. You can also consider as a long term investment where you actually move in and make repairs over the years. When you get ready to sell, hopefully the value will go up based on what’s available in that particular area and the changes you’ve made.
Based on these long and short term goals, make sure that you do your homework before you invest your money because you want to have sound investments. With any savings, make sure that you’re getting the best interest rate that you can and investment in dividend stocks that are going to pay you the largest dividend so you can have money going back into your account. As you start to save more over time and you continue to read on different investments you’ll see that your short and long term savings goals are definitely within reach!