Building wealth with long-term investments

Posted on: 7th September 2021 in Investments

Investing is one of the best ways to build wealth and cover your financial needs. If you have ever considered becoming an investor, you might have read about long term investments as well as short term investments. In this blog, we will be looking at long term investments and how they could become a part of a greater financial plan.

Long term investments: What does the term mean?

Many people associate investing with trying to make quick money in the stock market; however, it is through long-term investing that regular investors can truly build wealth. According to investopedia.com, “long term refers to the extended period of time that an asset is held. Depending on the type of security, a long-term asset can be held for as little as one year or for as long as 30 years or more.”

Some economists suggest that long term investments are the ones that are held by investors for more than eight years, but this is a rule of thumb as there are no strict criteria.

Types of long term investments

There are many types of long term investments that you could include in your financial plan. However, if you think that you don’t have the necessary financial knowledge to judge which investments would be beneficial to you, we would suggest seeking advice from a fully qualified and experienced financial adviser such as the ones that offer their services through Holborn.

Let’s see which are some types of long term investments.

Property

Brick and mortar have always been one of the best long term investments suggested by economists across the world. Despite the financial crisis that hit Europe during the previous decade, the property market remained resilient. People who had invested in property saw their portfolios retain value or suffered minimal losses compared to other types of investments.

As we have left the financial crisis behind us, property prices have increased significantly across Europe. One of the most significant advantages of owning property is the regular rental income it can generate for you. This way, you can either invest in an additional property or direct funds to other investments, improving your finances.

Bonds

Bonds are among the most known long term investments. According to Forbes, “bonds are investment securities where an investor lends money to a company or a government for a set period of time, in exchange for regular interest payments. Once the bond reaches maturity, the bond issuer returns the investor’s money.”

The two main types of bonds are government and corporate. They are issued by governments or corporations to finance new projects or ongoing operations. Economists suggest that bonds could be secured long term investments if investors perform thorough research and know the pros and cons of their moves. Government bonds are considered safer than corporate bonds, but the eurozone’s financial crisis has shown that they are not as safe as we once thought.

Stocks

For people who aren’t able to spend time searching the stock market for great opportunities, investing in a stock fund is probably the best option. Stock funds are less risky than purchasing individual stocks as index funds are made up of stocks that mirror the firms and performance of an index such as, for example, the FTSE 100 or S&P 500 etc. Index funds are passively managed and have the advantage of low fees.

Another option is to buy individual stocks. However, this requires some market research which would take time and the costs could be high due to account management fees. Depending on the market fluctuations, stock prices could increase or decrease whilst there is always the danger that the company won’t pay dividends. Ups and downs in stock prices could put a strain on your financial plan so we’d suggest seeking advice from a financial expert that would give you valuable insights.

Long Term Investing with Holborn

Where there is investing, there is a risk. However, there are ways to minimise it and maybe get the return on investment that you seek. If you feel that you don’t have the necessary financial knowledge to add long term investments to your portfolio, we invite you to get in touch with our team of fully qualified and experienced financial advisers at Holborn.

With more than 20 years of experience in financial markers, Holborn recruits only the best financial advisers who will listen to your needs and create the financial plan that would help you achieve your financial goals. Contact us today for a free consultation by filling in the contact form below.