Invest in Stock Market for Your Future: Long Term or Short Term
Stock market investments have been attracting millennials and Gen-Z more than anything in the year 2023. Everyone is trying to make a fortune out of the stock market or crypto market.
No, we are not going to sell you any product or convince you to create an account in any crypto exchange.
We are here to talk about the most basic question in the stock market: Long Term or Short Term investment?
Any type of investment in the world can be categorized in 2 different categories that include long term and short term investment. Both types of investments have their own pros and cons; let’s take a look at a few of the important ones.
Long term investment in the stock market
Any investment longer than one year or more is known as a long-term investment in today’s stock market. High net worth individuals and investment companies usually invest for the long term. Warren Buffett is one of the prominent high net worth individuals who is known for his long-term investments in Apple, Coca Cola, and Microsoft.
Pros of long term investment
- Safe and secure: Long term investments are usually more secure and do not cause major stress even in a bearish market.
- Cost-effectiveness: Long term investments are usually cost-effective, and you don’t have to pay many investment charges.
- Better compounding: Compounding is one of the biggest pros for long term investment. Individuals such as Warren Buffett have compounded billions of dollars using long term investment.
- Less work time: You don’t have to spend much time looking at the prices of stocks during long term investment.
Cons of Long term investment
- Long term investment demands more patience.
- You may also lose other multifold opportunities.
- Low return on investment may also cause inflation over a certain period of time.
Short term investment in the stock market
Every new investor loves short term investment as you keep making new purchases every day. Short term investment is a high-risk type investment which might result in your investment going down near to zero.
It’s a higher risk investment that is not a piece of cake for every new investor in the stock market.
Pros of short term investment
- Fast profits: Short term investors can easily multiply their investment in a short period of time with the high-risk investment.
- Fast learning: Along with fast profits, you may also experience faster learning as compared to long term investment where you have to wait months to see the results.
Cons of Short Term Investment
Emotional stress: Short term investment may also result in emotional stress, including anxiety and depression.
More volatile: High volatility is a part of short term investment which may result in more downfall in any shorter span of time.
Long term investment and short term investments both are a huge part of the stock market with hundreds of pros and cons.
There are a huge number of things that you have to learn before you start making any type of investment.
We recommend long term investment for individuals who have just started, and short term investments for those who already have experience in the stock market and technical analysis.