What’s the right type of investment for me?

Will a long-term investment makes sense for your scenario, or should short-term or middle-term investment be the best way to go? When it comes to investments, the first thing you need to do is be very clear as to what you want out of it and what are you investing your money for.

Investments, irrespective of financial class of a human are mainly divided into three categories: short term, middle term or long term investments.

Short Term Investments

Short-term investments, also known as marketable securities or temporary investments, are those which can easily be converted to cash, typically within 5 years. Examples of short-term investments are:

1. Certificates of Deposit
2. Money Market Accounts
3. Treasuries
4. Bond Funds
5. Municipal Bonds
6. P2P Lending
7. Roth IRAs

Related: Setting Investment Goals

Middle Term Investments

Medium-term goals are made for a period of more than one year but unto three years. These investments are generally made for saving taxes and the yield on such investments is usually guaranteed. These investments are not as risky as many of short-term investments are.
Below is the list of financial investment tools for middle term investment.

1. Tax Exempted Government Bonds
2. Corporate Bonds
3. Unit Investment Trusts
4. Market Linked Tax saving Insurance plans
5. Tax saving mutual fund schemes
6. Treasury and Agency Instruments or Government Securities
7. Bank Deposits
8. Stocks Investments

Long Term Investments

Long Term Investments are those, which are made for a period of more than three years, and they are planned till retired age as well. Taking capital gains and risk cover factors into consideration, which provide solid foundation of financial self-dependency in retired age and platform for heirs, makes these investments. Apart from low tax on capital gains long term investments also have other tax benefits.

1. Real Estate Investments
2. Annuities
3. Life Insurance
4. Long Term Deposits with Government Bodies
5. Long Term Deposits in Bonds
6. Capital Investments in corporate sector or in any secured business in form of asset

Intelligent investors realize the importance of financial planning first and begin to work on savings before investing which enable them to generate surplus cash and start planning strategically. By understanding the concept of short-medium-long term investments, you will be able to put all of your money to best use and get the most from your portfolio!

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