Investments are savings over a relatively longer period of time that can be converted into higher return paying options. Investing is crucial for everyone.
Long term investment is wealth creation in future while short term investment is about capital preservation. In short term investments you have safety which helps in the protection of the principal amount but does not offer future potential. These safe investments along with interest rates can lead you to lose money through inflation. So, when investing, you need to think in long terms.
A long-term investment is an investment that will overcome the risks of inflation and interest rates and help grow your money many times over. It has a higher probability of maximizing your returns over a 10-year period as compared to competing alternatives.
Types of Long-Term Investment
- Equities or Stocks – They are primary long-term investments. They pay dividends, providing you a steady income. You can buy high dividend stocks from an investment company in Dubai as they fetch yields higher than fixed income investments.
- Long Term Bonds – They are high interest-bearing securities with frequent terms of 20 years to 30 years. Long term bonds include government, corporate, municipal and international bonds.
- Mutual Funds & ETF`s – Exchange Traded Funds – They are portfolios of a large number of different bonds and stocks. All you need to do is allocate a certain amount of your investment capital into one or more funds, and the money will be invested for you.
- Real Estate – Apart from considering stocks, bonds and mutual funds, also real estate might be a very attractive long-term alternative as well.
Real estate investment with its highs and lows, requires care while buying. Buying and holding properties in locations that will be at the centre or around business hubs or transport locations, such properties can only be expected to gain in their value as time goes by.
There are many investment opportunities in Dubai. Real estate investment is a lucrative long-term real estate investment in Dubai. Investing in a rental property or a home or a hotel is considered a stable investment choice.
- Tax Sheltered Retirement Plan – This gives you important tax benefits when you hold investments in tax-sheltered retirement plans. Your investments can earn income and capital appreciation year after year, without immediate tax consequences. Funds become taxable only when they are withdrawn from the plan.
Diversify your portfolio
You must have a mix of investments across different categories. It’s about building the kind of investment portfolio that will provide you with income for later in life, and for the rest of your life. That could be retirement, or sometimes sooner.
Long-term investment means accepting a certain amount of risk in the pursuit of higher rewards. Equity type investments, like stocks and real estate tend to be the best long-term investments because of their potential for capital appreciation. Ensure that these make up the bulk of your long-term portfolio allocation.
In long term investment you have capital appreciation that can produce double-digit returns, leading to increasing your portfolio many times over in the future.