Investments Best Suited for Long-Term Investing
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Investments Best Suited for Long-Term Investing
Long-term investors seek to build portfolios that will gain maximum value over time. Certain kinds of investments are particularly well suited to helping investors take advantage of long-term growth trends.
Things To Know
- Growth stocks and mutual funds are suited for market ups and downs.
- Bonds with long maturities are also common among long-term investors.
- Real estate, leases, and collectibles are examples of other long-term investments.
Growth stocks and growth mutual funds
Growth stocks are stocks from companies with a strong potential for future growth. The earnings of growth stocks are expected to grow faster than the market average. More volatile and with few dividends, the true potential of growth stocks lies in their future prices. They are well suited for the long-term investor willing to take a chance and hold on through short-term ups and downs. Growth mutual funds, which invest in a variety of growth stocks, are a slightly less volatile way to invest in growth stocks.
Bonds with long maturities
Another typical investment for the long-term investor is bonds with long maturities of ten or more years. Although bonds with long maturities are more at risk from changing interest rates, they also offer higher returns than shorter bonds to compensate for this risk.
Other investments
The long-term investor can also invest in other assets that may take longer to grow in value but show high returns over time. These include real estate, leases, and collectibles.
Investors who are willing to wait for their money can take advantage of more volatile stocks, as well as bonds and other investments that offer higher returns to reward the investors’ patience.
