Long-Term Investment Definition and Examples

Long-Term Investment Definition and Examples

Long-Term Investment – Ever heard of the term long term investment? What do you think about this type of investment? Investment is one of the activities favored by many people today. With investment, you can maintain your wealth assets in the future, so that later you will have definite financial security.

Many are still not aware of the importance of investing, but not a few are already preparing to invest. There are two types of investment, namely long-term investment and short-term investment. Then, what is meant by long-term investment and what are some examples of these investments?

In this article, we will explain what long-term investment is, complete with examples, strategies, and more. Come on, see the discussion!

Understanding Long-Term Investment

long-term investment is the investment of assets for a period of more than one year with the aim of controlling other companies. This means that long-term investments do take quite a long time, it can be up to a year or more to achieve high returns.

In short, company A invests heavily in company B. Then company A gets very significant influence over company B without having a majority of the voting shares. In that case, the purchase price will be referred to as a long-term investment.

Long-term investment takes a long time, can be a year or even more. Unlike short-term investments that are for sale, long-term investments usually won’t be sold for years. There are even cases of long-term investments that will never be sold at all.

If you decide to become a long-term investor, then you must be willing to be patient for a long period of time. With your patience, the potential amount of profit that you will get is very high.

Long-Term Investment Goals

Some of the long-term investment goals are:

    • Get a fixed income in any given period. Fixed income from having long-term investments can be in the form of:
      • flower,
      • royalty,
      • dividend,
      • rent money,
      • and other forms of shareholding gains (for example).
    • Establish a special purpose fund, for example for expansion purposes, product expansion, etc.
    • Realizing personal/family financial goals that cost a lot of money, such as:
      • education fund,
      • Umrah/Hajj pilgrimage fees,
      • wedding expenses,
      • house buying costs,
      • pension costs, and so on.
    • As the controller of a company or certain person with capital ownership.
    • Ensuring the availability of production raw materials in the market for the products to be produced.
    • Directing company funds specifically. For example, for social purposes or for the sake of expansion of a company.
    • Reduce competition among similar companies.

Types of Long-Term Investment

1. Investment in Precious Metals (Gold)

The first example of long-term investment is the precious metal gold. You certainly know how the price of gold continues to rise every year, right? This consistent increase in the price of gold makes it one of the most popular types of long-term investment.

Gold is also the right choice for those of you who are just learning to invest. You only need to monitor the price of gold when it starts to decline and keep it for a long time around 5 to 10 years.

2. Stock Investment

Shares are a type of investment in the form of proof of capital ownership of certain assets or companies. Many large companies sell shares to the public so they can get a capital injection to develop their business.

As an investor, you will certainly benefit by buying shares. You can get high profit from buying shares. But it should also be understood, stocks have a very high risk because the profits obtained are also high (high risk high return).

3. Mutual Fund Investment

The choice of the next long-term investment instrument that is very suitable for those of you who are just learning to invest is mutual funds. This investment instrument involves a third party to manage the funds that you enter as an investment. Since you don’t need to manage your own mutual funds, the value of this one investment tends to be stable compared to stocks.

Later, your investment funds will be managed by the investment manager for inclusion in the stock market. So, mutual funds will make it easier for you to invest because there are already parties who help in the process of managing the funds to be invested.

4. Property Investment

Houses, land, or other buildings are property assets that can serve as long-term investments. Every year property prices continue to increase but you can see a significant increase over the last 10 years, so the benefits of this long-term investment are quite high.

If you have started buying property now, the price of the property in the next 10 years will certainly increase. It’s just that you need to understand that in investing in property, you also need a very large capital.

5. Deposit Investment

One of the easiest long-term investments for novice investors to make is deposits. A time deposit is an investment instrument that requires you to put a certain amount of funds into the bank within a predetermined period of time.

One of the most popular types of deposits to invest in is time deposits. The benefits obtained through time deposits are even greater than with ordinary savings because of the higher interest rates. In addition to higher interest rates, time deposits are also safer than ordinary savings. With this investment instrument, you can save a certain amount of money within an agreed period with the bank.

Within the investment period, you cannot withdraw the money that has been put into it. If you make a withdrawal before the due date, a penalty will be imposed. Deposits can be a safe choice for those of you who want to start investing. In addition to the easy process, the risk of this investment is very small and the return you get is also very profitable.

That’s an explanation and review of long-term investment, before starting to invest, make sure you have thought about the plan and the risks carefully in order to avoid losses and get the maximum profit.