There are several great ways to invest this year. However, with so many options, making informed decisions about how you’ll invest your money is crucial. After all, most people invest to save money for large projects or expenses in the future. So, if you want to learn more about long-term investments and which ones are popular this year, just keep reading.
Contents of This Article:
- What Is a Long-Term Investment?
- Long-Term Investments vs. Short-Term Investments
- Popular Long-Term Investments for 2023
- Manage Your Investment Properties With Ease
What Is a Long-Term Investment?
A long-term investment is an asset you hold over a long period. However, the timeframe depends on the type of asset. For instance, some investments are considered long-term if held for one year or longer. On the other hand, some investments are long-term after having them for ten or more years.
Some common examples of long-term investments include stocks, retirement accounts, real estate investments, and more. While each option differs, ten years or longer is the standard duration for most long-term investments. However, it depends on when you start investing and when you want to cash out your investment.
While some long-term investments are passive, some are not. For example, owning real estate or rental properties requires maintenance and work to keep things moving. However, this, too, can be a passive investment as long as you have a property management company in Baltimore.
Most people use long-term investments to save up for significant expenses or projects in the future. For instance, you may save up to buy a home one day or fund your retirement. Generally, these investments take longer than a few months or years to complete. So instead, they’re used long-term, allowing the money to grow enough for a future financial goal.
Long-Term Investments vs. Short-Term Investments
The main difference between long-term and short-term investing is the time they’re held. We know that long-term investments are generally held for ten years or more. On the other hand, short-term investments are usually held for one year or less, making them more of an active investment. Some investors hold investments for a few months at a time, while some buy and sell within a few weeks or days.
Short-term investments are generally riskier than long-term investments. This is because most short-term investors use volatile assets with prices that move quickly enough to profit within a brief period. That said, nearly any asset can be a short-term investment, but most have high volatility and liquidity.
On the other hand, long-term investments are held for much longer and are generally safer. Another difference is that long-term investments are expected to gain value slowly but predictably. As such, they’re better to hold long-term to allow them to grow as much as possible.
Luckily, long-term investments are generally passive, meaning you don’t have to do anything besides watch your investment grow. But, on the other hand, you much watch short-term investments closely and make moves at the right time to be successful.
Popular Long-Term Investments for 2023
If you want to invest this year, why not start with a long-term investment? If you start investing now, there are plenty of opportunities to make money in the long run. That said, here’s a list of popular long-term investments for 2023.
Real Estate
Investing in real estate is a highly lucrative opportunity. While it’s not a simple investment, it can majorly pay off over time. In fact, it’s one of the most profitable long-term investments if you do it right. For instance, if you want to invest in real estate, it takes a lot of research to ensure that market conditions are suitable for a long-term investment.
However, once you get started in real estate, you can quickly grow your portfolio of properties. Once you pay off one mortgage, you can take out another to fund more properties, allowing you to multiply your assets in no time. However, to invest passively, you must consider who will manage the properties. You can do it yourself or hire a comprehensive property management company to assist with the hard work.
Stock Funds
If you know anything about buying stocks, you know it takes careful research and continuous market monitoring. Additionally, it’s pretty risky. After all, if a company doesn’t perform as well as you’d thought, you can lose a significant amount of money.
A stock fund is an alternative solution, simplifying the buying process. Stock funds allow you to pool your money with other investors to purchase various stocks. Some groups focus on particular industries, while others are connected to a certain index, like the S&P 500. Either way, it reduces risk by spreading money over various investments.
Bond Funds
Similar to stock funds are bond funds. The main difference is that you’re investing in a pool of bonds instead of stocks. As such, as long as your money stays within the fund, you’ll receive a regular payout as bond payments come in.
There are two broad categories of stocks and bonds. For instance, mutual funds have high minimum investments and a financial manager to run everything. On the other hand, exchange-traded funds (ETFs) are traded like regular stocks. That said, analyzing your financial situation before choosing an investment is crucial.
Real Estate Investment Trusts (REITs)
Investing in real estate is quite expensive and requires a lot of research and help from other industry professionals. However, there are several ways to invest in real estate without purchasing a property. One standard method is with real estate investment trusts.
Real estate investment trusts (REITs) allow investors to buy shares of a larger holding company that owns and manages real estate. That way, you can reap the benefits of real estate investing without the headache of managing properties. However, you would have less control than you would over personally owned properties.
Real Estate Crowdfunding
Another real estate investing method that doesn’t involve buying properties is real estate crowdfunding. It’s similar to REITs, where multiple investors pool their money to buy properties. However, it’s different since you can choose which properties to invest in.
While you can buy and sells shares of a REIT whenever you want, your crowdfunding investment is generally locked in place for several years. After all, you’re helping to fund a private real estate loan. In return, you get annual payments as high as 14% of your original investments. That said, some platforms require you to be an accredited investor, while others allow anyone to invest in a project with as low as $500.
High-Yield Savings Account
While it may give you a lower return than other long-term investments, a high-yield savings account is generally safe. After all, their performance is guaranteed, which you can’t say for other investments, like stocks, bonds, etc.
As such, putting your money toward savings is a great way to keep funds readily available without the risk of losing any. If you want to open a high-yield savings account, look for an online bank. Generally, they have lower overhead, meaning they can pay higher rates than other banks.
Growth Stocks
If you’re interested in stocks, there are plenty of avenues to explore. One suitable method is investing in growth stocks. Growth stocks are those that deliver the highest returns. Generally, they’re tech stocks, especially in recent years. However, that’s not always the case. Ultimately, they’re fast-growing businesses that continuously grow and thrive.
While they generally have high returns, growth stocks are riskier than more established companies. After all, there’s a chance that the company doesn’t grow as intended, and the stock is overvalued compared to the company’s performance.
Value Stocks
Opposite of growth stocks are value stocks, which are undervalued based on valuation metrics. For instance, a company’s stock may be priced below where it should be based on its performance and price-to-earnings ratio.
Undervalued stocks are favored in times of rising interest and generally overperform during recessions. As such, these factors make them an attractive investment for some individuals in 2023.
Manage Your Investment Properties With Ease
Now that we’ve gone over tips and strategies for long-term investments in 2023, you should start planning your goals for this year. That said, if you plan on investing in real estate this year, several factors must be considered. For instance, who will manage the property and potential tenants if you rent out your new property investment? Some investors do the work themselves, while others hire reputable property managers to make things easier.
Need More Advice? contact us today!
Bay Property Management Group offers comprehensive rental management services to landlords across Baltimore, Philadelphia, Northern Virginia, and Washington, DC. Whether you need help finding tenants, maintaining rentals, or answering tenant complaints, our dedicated property managers can help. Contact BMG today to learn more about our services and how we can help your rental business succeed.
