Did you know about 40 percent of Americans are feeling they’re late on their financial milestones? You certainly don’t want to belong in this group.
Yet, if you don’t take actionable steps to achieve your financial goals, whether that be becoming a millionaire or living a debt-free life, you’ll find yourself in unending financial misery.
So, how do you set yourself up for financial success in the future? One of the best ways is to make a long-term investment. But there are many different types of long-term investments, making it hard for the average person to know what’s ideal for them and what isn’t.
That’s why you’re here. This article describes some of the best investments you can make in the long run.
The Stock Market
It’s hard not to think about the stock market when you’re looking to make a long-term investment – and for good reason.
A $10,000 investment in Amazon stock in 1997 ($16 per share) would be worth more than a whopping $24 million in 2022! There are similar success stories from people who have invested in America’s greatest corporations, such as Apple, Alphabet, and Tesla. It’s no wonder the stock market is the investment market of choice for most American investors.
It’s possible to make quick money in the stock market, but it’s the long-term that promises the lowest risk and highest returns. The key to being successful is patience. If you buy shares today and sell them next month after they have appreciated by a few dollars, you’ll make money alright, but you might miss out on an opportunity to bank big bucks when the share price increases a hundredfold after several years.
This is not to say the stock market is loss-proof. People have lost their retirement savings in stocks. If you buy stock in a company and the share price keeps dropping, you’ll be counting losses.
Do extensive research before investing in a stock for the long term. Although it’s impossible to accurately predict the future, there are tools that will help you forecast stock market performance.
There isn’t a more concrete example of a long-term investment than real estate. When you build a house, even if it’s your residence, it will probably outlive you.
The rationale behind investing in real estate is simple: land typically appreciates in value over time. So, while a building can wear and tear and depreciate as a result, the land it sits on will keep gaining value, raising the market worth of the entire property in the process.
Besides buying your own home, there are different types of long-term real estate investments you can make. You can buy raw land and hold it for several years, for example. You can also invest in residential, commercial, and industrial property.
Another alternative, but which doesn’t include buying physical property, is investing in real estate investment trusts (REITs). A REIT is a company that owns and operates several income-producing real estate properties. You buy shares in a REIT and earn dividend income periodically, much like you would earn divided from being a company shareholder.
Although real estate has a solid reputation for being a low-risk investment, market conditions can hurt property values. In 2008, for example, there was a stock and housing marketing crash. Property values plummeted significantly, leaving some owners underwater.
Perhaps the silver lining of investing in physical real estate is you won’t lose your investment. Property values might crash, but give it some years and they’ll start to climb again. As long as you don’t panic-sell, you’ll live to make a good profit.
Precious metals might not be as popular as stocks and real estate, but they offer an ideal long-term investment opportunity.
Precious metal prices tend to increase over time. In 2000, for instance, an ounce of gold sold for about $450. In 2022, an ounce goes for about $1,700.
You can purchase precious metals in coins, bars, and other physical forms (visit this shop to buy gold coins). You can also buy metal futures, just as you would buy stock futures.
Investing in index funds is much like investing in the stock market, only that you will be investing in multiple companies at once, not a single stock.
The S&P 500, which tracks America’s top 500 companies in the stock market, is an example of an index. So, if you invest in an S&P 500 index fund, you’ll be banking on the collective performance of those companies.
Investing in index funds is a great way to reduce your risk exposure while diversifying your stock market portfolio. There are hundreds of index funds, including international indices, to choose from. As always, do proper research before investing your money.
When you buy a treasury bond, you’re essentially lending money to the issuing organization. If it’s issued by a government, it’s known as a treasury or sovereign bond. If it’s issued by a business, it’s a corporate bond.
Bonds are long-term, ranging from 20 to 30 years. They pay interest annually and you can cash out your original investment at maturity.
Treasury bonds are low-risk and you can earn good returns if you hold them to maturity.
A Long-Term Investment Can Help You Reach Your Financial Goals
Whatever your financial goals are, there isn’t a better way to reach them than making a long-term investment. You have multiple options to choose from, but the best approach is to have at least a couple of long-term assets in your portfolio.
All the best and explore our blog for more investment ideas and personal finance advice.