We live in an uncertain time, and you must invest wisely. You may have a steady income, but you need to invest your money efficiently to meet your goals.
Published on 05 April 2022
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Unforeseen expenses may arise at any point in time. For example, your car may break down suddenly tomorrow, you or someone from your family might need immediate hospitalisation due to a sudden health condition or accident. Don’t take it otherwise, but mishaps like these do come unannounced, and hence, as responsible individuals, it is our goal to have proper financial support during times like these!
Hence, why not go for regular investments? But you may not be sure whether to go for a short-term investment or a long-term investment. Hence, in this blog, we will discuss the difference between short-term and long-term investments. So, let’s dig into the details below.
Short-Term Investment vs Long-Term Investment
According to the market experts, it’s prudent to do ample research before investing. What is suitable for you might not work for a friend of yours. This is because your investment objectives will be different from your friend’s objectives. Hence, it is better to consider your overall financial goals to determine whether you should opt for a long-term investment or a short-term investment.
Long-Term Investment
These are the kind of investments that will offer you higher returns in the future that typically spans above five years. These market-linked investments come with risks and hence, aren’t suitable for first-time investors or those whose risk-bearing capacity is less. However, if you are a pro in investing in aggressive market tools, you may consider investing in the following options listed below –
Mutual Funds are long-term investment instruments where you can expect higher returns if you invest properly. There are several small and mid-cap equity funds where you can invest to meet your goals. Mutual Funds are long-term investment instruments where you can expect higher returns. Hence, invest diligently.
Stocks – These are the physical representation of an organisation’s total value. For example, when a private company offers an IPO (Initial Public Offering) in the stock market, investors can invest in its stocks once the company's shares start to trade in the different stock exchanges.
Stock investments offer higher returns as compared to other investment avenues. But you need to take expert help in doing so. Essentially, a stockbroker or a broking firm can help you trade easily in stocks.
Short-Term Investment
Short-term investments are the ones where you can invest for a short period, generally up to three years. These are highly liquid investment instruments with the little market risk involved. So, if you have just started investing or thinking about investing your hard-earned money for a better and financially secure future, you may think of starting with investing in one of the below-mentioned short-term investment instruments –
Gilt Funds – You can only invest in government securities with these funds. These are also considered the safest investment funds due to their zero-credit risk.
Bank Fixed Deposits - The fixed deposit tenure can range between 14 days to 10 years. Also, these can be renewed upon maturity. However, for fixed deposits, liquidity can be an issue as a few banks won’t allow premature withdrawals.
Large-cap Mutual Funds – When you invest in these funds, your money will be invested in businesses with a large market capitalisation and offer stable returns after being invested in a short duration of one to three years. Again, as these investments are made in well-established businesses, these funds are low-risk investment instruments.
Long-term vs Short-term Investment – Which One is Better?
One cannot pick one over the other as there’s no clear winner between the two. However, short-term investments are meant for different financial goals compared to long-term ones. So, based on your risk appetite return expectations, you can select between the two. Also, if you just wish to preserve your money and are happy enough with moderate timely returns, short-term investments could be the right choice for you. On the other hand, long-term investments instruments are advisable for you for higher returns.
Conclusion
Online trading is now easier than ever with the advancement in technology. It’s quick, hassle-free, and convenient for investors to trade in different investment instruments sitting at the comfort of their home/office. However, before choosing any particular investment tool, it’s always better to learn more about your financial goals to make an informed choice.
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There some major benefits of short term investment. One of the main benefits is that they are highly liquid so you can sell these investments and get money whenever you are in need. Moreover, short term investment tends to be less riskier than long term investment.
The safety of the long term investments depends on the type of investment. For investments like stocks, the risk tends to be higher than other assets. But, these also provide a chance of earning better returns in the long run which can lead to a higher purchasing power.
When deciding between long-term and short-term investment options, you should be very clear about your purpose of investment or your reason behind opting for such an investment scheme. You also need to consider how much money you will be expecting out of your investment. Based on all of this, you will know better which type of investment will suit you.
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The safety of the long term investments depends on the type of investment. For investments like stocks, the risk tends to be higher than other assets. But, these also provide a chance of earning better returns in the long run which can lead to a higher purchasing power.
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Sharekhan Comtrade Private Limited (TM) operates the web site accessible from the URL www.myespresso.com (the “web site”').
Sharekhan Comtrade Private Limited is committed to protecting your privacy and utilising technology that gives you the most powerful, safe, online experience that you can get anywhere else.
Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.
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The Web Site's online surveys ask visitors for contact information (like their mobile number or e-mail address) and demographic information (like their pin code, gender, age or income level). The Web Site uses contact data from its surveys to send the user information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Ltd.'s partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below. Demographic and profile data is also collected at the Web Site. The Web Site use this data to tailor its visitor's experience at the Web Site, showing them content that it thinks they might be interested in, and displaying the content according to their preferences. This information is shared with advertisers on an aggregate basis.
Sharekhan Comtrade Private Ltd run contests on the Web Site in which we ask visitors for contact information (like their e-mail address). Sharekhan Comtrade Private Limited uses contact data from its contests to send users information about Sharekhan Comtrade Private Ltd. and promotional material from some of our partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below.
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Further to the above, in light of the recently notified Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011. (Hereinafter referred to as the Rules)
The following shall be deemed to be sensitive information :
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Financial information such as Bank account or credit card or debit card or other payment instrument details;
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