Most people already know that long term investments are vital to an individual’s well-being. With life expectancies on the rise and social security system awaiting a major restructuring, it is up to you only to ensure adequate funding for years in retirement.
A recent recession has brought a lot of skepticism about using marketable securities and stock instruments as a base for long term investing. While most of it is pure emotions resulting from financial indexes dropping and economy slowing down, there are few lessons to be learned in order to ensure your financial safety and security. There are a few long term investments that bring good returns and allow for minimal risks.
Despite the turbulence in financial markets, stock investing is the best long-term capital gain instrument. While many people panicked once they observed declining capitalization of the companies they invested their money in, stocks remain a high-yielding investment. It is important to know that stock market is very vulnerable and experiences major ups and downs every few years. Despite the temporary difficulties, if you look at the larger picture, you may see that over extended periods, as 20 or 30 years, stocks allow for great money-saving opportunities. It does not mean, however, that all stocks are the same. It is highly advisable to perform due diligence before considering investment into a stock of a particular company.
Bonds are one of the safest investments you may purchase when it comes to long term investments. With Feds lowering the rates to address recent economic slowdown, the yields on U.S. Treasury Bonds have left many investors disappointed. However, there are many more options to invest in bonds, resulting in decent ROI and providing great security. Many major U.S. and international corporations issue bonds with earnings far exceeding the rates on the CDs and U.S. Treasury Bonds. Eurobonds are also getting increasingly popular among investors, as they offer very promising returns and low risk.
Certificates of Deposit
Certificates of Deposit (CDs) may not be the highest-yielding long-term investments, but are definitely the safest ones, as they are FDIC-insured. While they promise lesser returns compared to stock market, the CD rates greatly exceed the interest you may get from a regular savings or a money market account. When investing in Certificates of Deposit, it is important to consider terms and interest. If the economy is slow, it is advisable to go with short-term CDs, as interest rates are usually lower during low-growth periods or economic declines. Once the economy gets on the rise and the Federal Reserve rates go up, you may go with long-term CDs, as you may get a chance to lock into a higher rate for several years.