Chances are if you are interested in investing, then you have experienced the struggle between wanting growth, but also wanting safety.
When it comes to investments, going the safe route can feel good in the short term, but in the long run, it can bring about feelings of regret. On the other hand, going the growth route can elicit anxiety in the short term, but if it brings a return, in the long run, you’ll be ecstatic.
Long-Term Investments That Generate Returns
1. Stocks
Stocks have been a consistent staple long-term investment for decades. When you invest in stocks, you are investing in a company. Stocks are a good way to make a long term return, but they can also be unpredictable because you are basing your returns on the performance of a company. There are companies that are considered more stable than others, but you never know when a volatile market will hit.
Remember that you should properly diversify your portfolio, and you don’t just place all your investment in one company. This is where a financial advisor can come in handy. They are educated to know how to properly create a low-risk portfolio, or a high-risk portfolio, depending on your preferences.
2. Interest-Paying Bonds
Long-term bonds, like stocks, are good long-term investments. Where they differ from stocks is that they don’t represent ownership in a company. When you purchase an interest-paying bond, you are lending money to the company you are buying a bond from.
When you purchase an interest-paying bond, then you can expect to receive interest payments semi-annually, until it is redeemed at face value. Investing in interest-paying bonds is a good way to diversify your portfolio, but you must be aware of the possible price drops when interest rates rise.
3. Mutual Funds
Mutual funds are diversified investments that are typically managed by an investor or a managed index fund. Mutual funds invest in stocks, bonds, and a variety of other investments, creating that diversified portfolio that you might be looking for.
One of the perks of investing in mutual funds is that they are a good option if you are looking to make a small investment or a big investment. The downside to investing in mutual funds is that they have high expense ratios but on the other hand, they are an easy way for small investors to invest in a diverse portfolio.
If you have any questions, reach out to us, and we will give you a helping hand!
Diversification and asset allocation strategies do not assure profit or protect against loss. Past performance is no guarantee of future results. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal.