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Difference Between Short-Term and Long-Term Investment

When we talk about investing, surely we will often hear the terms short-term and long-term investments. Both of these investments can actually provide benefits for investors.

So what’s the difference between the two, I’m curious right? Here we try to tell for those of you who are still confused.

Short Term Investment

As the name implies, short-term investments are investments made by investors for a short period of time. At least one year. The capital issued is also relatively small.

The movement of this short-term investment which is very fast makes the risk offered by it is also quite large. This is influenced by various factors. One of them is from unstable market price movements.

Types of Short Term Investment

1. Money Market Mutual Funds

Money market mutual funds are one type of mutual fund investment that is intended for short-term investment. The problem is that the managed funds will be transferred to deposits and securities with maturities of under one year.

2. P2P Lending

P2P Lending is also an investment instrument that can be chosen for those of you who want to get profits in a short time. Moreover, there are now many fintech companies that offer P2P Lending investments with tempting returns, even above 20 percent.

Long term investment

Meanwhile, long-term investment is intended by investors for a long period of time. Maybe it’s for old age. Minimum to be called a long-term investment lasts about five years.

Because it is long-term, then of course the capital that must be issued is deeper than short-term investments.

However, one thing that is attractive in this type of investment is that it is inversely proportional to short-term investments. Long-term investment turns out to be less risky because the movement of money is not fast. Therefore, it is not surprising that Warren Buffet said: “patience is an important key in investing”.

Types of Long-Term Investment

1. Blue Chip Stock Investment

Direct stock investments are known to have equally large risks and benefits. Therefore, this investment product is suitable for those with an aggressive risk profile.

That’s why stock investment is perfect for those of you who want to invest long-term because your profits can only get maximum profit over five years.

2. Stock Mutual Fund Investment

Even though they both play in the stock sector, there are differences between direct stock investment and stock mutual funds. If it’s a direct stock, you are the one who manages the investment fund. While stock mutual funds, the funds will be managed by the investment manager.

Even so, the advantages offered are equally great. Therefore, stock mutual funds can be the right choice for those of you who want to prepare a retirement fund because it is a long-term investment.

So that’s roughly a brief description of the difference between long-term and short-term investments. If you still have something to ask us, just ask it in the comments column. If we know the answer, we will surely reply.


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