DIFFERENCE BETWEEN LONG TERM INVESTMENT VS SHORT TERM INVESTMENT

 DIFFERENCE BETWEEN LONG TERM INVESTMENT VS SHORT TERM INVESTMENT


 LONG TERM INVESTMENT

• 90 days - 12 months+
• Investing in value 
• Fundamental analysis 
• Risk management
•   " remember that Rome was not built in a day" 

SHORT TERM INVESTMENT 

• 5 minutes - 90 days 
• Investing in price
• Technical analysis 
• Volatility focused 
•  " remember that Hiroshima was destroyed in a day" 

Following are some differences between long term and short term investments:


They carry different expectations: 

While purchasing an investment that you intend to keep for many years, you may be expecting the investment to increase in value so that you can eventually sell it for a profit. Also, you may be looking for the investment to provide more income. On the other hand, when you invest short-term, you are generally not expecting much in the way of a return or an increase in value. Typically, you purchase short-term investments for the relatively greater degree of principal protection they are designed to provide.




They meet different needs at different times of life: 

When you’re young, and just starting out to invest you may require a mix of long- and short-term investments. You might need the short-term ones thinking to help pay for a down payment on a home, while the long-term ones could be used for your retirement. But later in life, you may have much less need for long-term investments, with a corresponding increase in your need for short-term investments.


They can satisfy different goals: 

If you purchase investments that you intend to hold for the long term, you probably have a long-term goal in mind such as living a comfortable retirement. On the other hand, a short-term investment would be more appropriate if you know that you will need a certain amount of money at a certain time (to purchase a car or to fund a vacation).


Risks Associated with them: 

They carry different risks. All investments carry some type of risk. One of the biggest risks associated with long-term investments is volatility, the fluctuations in the financial markets that can cause investments to lose value. On the other hand, short-term investments may be subject to inflation.



The above points help you to understand long term as well as short term investments and also give you an information on when you can invest long term or short term.