Investing for the Long Term

by Brian Mcgregor - Date: 2007-03-23 - Word Count: 442 Share This!

If you are ready to invest money for a future event, such as retirement or a child's college education, you have several options. You need to be careful in not investing in risky stocks or ventures. These tend to be short term opportunities and promise high returns in a short timeframe. It is probably more advisable to invest your money in ways that are safe, and which will show a decent return over a longer period of time. Here are some of the types of investments which fall into that category.

First we'll look at bonds. There are various types of bonds that you can purchase. Bonds are similar to Certificates of Deposit and, instead of being issued by banks, they are issued by the Government. Depending on the type of bonds that you buy, your initial investment may double over a specific period of time. Bonds are extremely safe investments in that the Government would have to go broke for them not to be honored.

Mutual funds can also be relatively safe. Mutual funds exist when a group of investors put their money together to buy stocks, bonds, or other investments. One of the concepts of mutual funds is that by covering a number of stocks or bonds, the investment risk is spread. To become involved in a mutual fund, you need to do find a reputable, qualified broker who handles mutual funds. The broker will invest your money, along with that of the other clients who contribute to the mutual fund. Although usually a safe investment, mutual funds are a riskier venture than bonds.

Stocks are another vehicle which many people use for long term investments. Shares of stocks are essentially shares of ownership in the company you are investing in. When the company does well financially, the value of your stock can rise. However, if a company is doing poorly, your stock value can drop. Stocks, of course, are much riskier than Mutual funds as you are entirely dependent on the performance your single stock. However, even though there is a greater amount of risk, you can still purchase stock in sound and stable companies, and sleep soundly at night knowing that your money is relatively safe.

The important thing is to do your research before investing your money for long term gain. When purchasing stocks you should choose stocks that are well established. When you look for a mutual fund to invest in, choose a broker that is well established and has a proven track record. If you aren't quite ready to take the risks involved with mutual funds or stocks, then invest in bonds that are guaranteed by the Government.

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