Investing For Your Short And Long Term Future

Written by: Seth Rogers
10/14/2019

investments

Planning and making investments is not easy when there are many ways to do it. There are plenty of facts online about what you should and should not do and where it should happen. There are also many things to consider when planning an investment opportunity. You will need to consider the risks and the possible rewards and loss that can happen when investing.

Short Term Investment Opportunities

Saving money is always the first step to any investment. It is also a good way to keep you from financial problems when they come up. It is best to start with building a savings account and select a portion to start investing.

There are no absolute ways to invest and make a large amount of money in a short time, but there are some ways to secure your money will letting it grow.

  • Savings Accounts that are High-Yield

The Federal Reserve is raising interest rates after years of little or no way to secure higher interest rates. A savings account with a high-yield grows attached to your accounts and grows at a set rate by how much money is in the account. You can add to the money and save more which increases the amount of interest potentially earned on the account.

  • Certificate of Deposit

A certificate of deposit is a lot like the high-yield savings account except the money gets locked away for a select period and once the period has been exhausted you can access the money and either reset the clock for another rate or period or withdraw the interest.

The money put into the CD acts as a loan to the bank. You are authorizing them to access and use the funds to help others with their finances until the period you specify is expired. The bank pays you interest on your investment, and you get to benefit from the combined amount of interest and original investment when the time frame is up.

Long Term Investment Opportunities

A long term investment is one that lasts over a year or one that you are building to make money. There are different ways to do this with a higher degree of risk in some cases.

  • Money Market Accounts

Money market accounts can be set up through banks or financial institutions. A money market keeps your money more liquid if you do not want to have it restricted from access for a specific length of time. You or a financial institution can invest select money into the stock market through stocks, bonds, mutual funds, and exchange-traded funds.

Each type of investment made through the bank or entity will charge a commission for making the trade, and you will be responsible for selecting the stocks, bonds, etc. that you want your money to grow in. A money market is a higher risk investment because the stock market goes up and down with the world economies and there is no guarantee your investment will grow.

Stocks and select mutual funds often pay dividends to shareholders so you can expect to make a small amount of money from holding their stocks for at least a year. Dividends don’t usually provide the investor with large amounts of money, but add to the value of the portfolio you are building.

  • Real Estate

A real estate investor buys or holds property with the intent to make money from its operation or sale. Most people invest in real estate by buying a home. Real estate is an investment you make primarily as a young adult with the intent of holding the property until they have paid off the 20 or 30-year mortgage.

o Purchasing a home

The intent of buying a home and paying off the mortgage over the 20 to 30 year period is to gain improved value of the home and the property it’s sitting on. Selling the home before paying the mortgage adds to the risk of the property values at the time of sale such as the housing crisis of 2008; homes sales occurred below their purchasing worth causing financial losses around the country.

o Flipping a home

Buying a home that needs improvement with the intent of reselling it provides the buyer with the opportunity to improve the property. The improved property, with the added investment to improving the property can sell at a higher amount than the original purchase price.

  • 401 (k) Accounts

A 401 (k) account is one most frequently started by an employer on behalf of an employee, but there are ones that you can do on your own. A 401 (k) account takes a portion of employees take-home pay and invests it for the employee through an account set up for all employees. The employer often matches the investment or up to a certain amount to help the employee.

The 401 (K) investments are mutual funds, stocks, and ETFs selected by the employer. As a group account, the employees receive more by investing together. A 401(k) builds as the years progress with the intent of providing the employee with a way to retire securely at the end of their time with their employer.

A 401 (k) plan can be risky if the employee leaves before a select period has elapsed (usually ten years). There can be carry over into other roles within the same area or district if the employee changes jobs within the company or system, but leaving outright before their ten years is up often means forfeiting the money removed.

  • Investment Retirement Accounts (IRAs)

IRA s are set up as independent investment accounts that allow for up to $6,000 a year to be put into them or $6,500 if the person is over the age of 50. An IRA invests money through a handful of mutual funds that rise and fall with the economy. This type of account can be risky as it depends on the market to remain stable and grow for long term retirement security.


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Investing For Your Short And Long Term Future

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