3 types of long-term investments for your money
Posted: Thu Dec 12, 2024 3:17 am
Each investor may have a different objective for their long-term investments. Therefore, depending on their objectives and their horizon, they will have a different investor profile with a certain risk. This investor profile will determine their potential profitability and the risk assumed to obtain peace of mind with their investment.
As we said before, one of the determining factors in the risk/return binomial is the time horizon of the investment . If we are planning to spend a significant amount of money soon, we should only consider short-term options, in which liquidity is maximum.
However, if after making our calculations we come to the conclusion that we have sufficient solvency (and we have an emergency fund ) to invest for five or ten years without any surprises, it may be interesting to invest in the long term .
For many investors, long-term investing is neither better nor worse than short-term investing, it is simply different. On the one hand, it is a more relaxed investment, in the sense that it is not necessary to keep up with how the markets or industry data evolve.
But on the other hand, if history and statistics show rich people database anything, it is that long-term investments are the safest and most profitable of all.
Table of Contents
Where to make long-term investments
Index funds
ETFs
Pension plans
inbestMe and long-term investments
Where to make long-term investments
From our point of view, there are three products that can be exploited by investing in the long term: index funds, ETFs and pension plans .
Index funds
Index funds the great unknown in the national economy, with barely 2% of the total volume of assets under management. However, in other countries they are in full swing. For example, in the United States, where they already represent 40% of the total volume of investments.
Their great advantage is the disruptive nature of their approach: by replicating benchmark indices, such as the S&P500 or the MSCI World, they base their results on the evolution of the markets they imitate .
The success of index funds lies in the fact that in the long term, most global indices show an upward trend - the evolution of the last decades demonstrates this - so that regardless of volatility or what happens in the short term, in 5, 10 or 20 years we are assured of profits from our investment.
In addition, they have significant tax advantages , since we defer paying taxes until the moment of withdrawing the capital, which ultimately only maximizes our profitability.
ETFs
ETFs , acronym for Exchange Trade Funds investment vehicles very similar to index funds. Like the latter, they replicate the performance of a market and have even lower fees.
It is considered an exchange-traded fund, since unlike a conventional investment fund, it is listed on the market. This means that it can be bought or sold at any time, as if it were a share. .
However, they lose the tax battle against index funds. While index funds can be transferred without paying taxes, ETFs cannot. The Treasury applies the same regulations to them as to shares, so each purchase or sale has a tax toll.
Pension plans
Pension plans are another great long-term investment option , especially in Spain. With an inverted birth pyramid, this financial product is becoming increasingly important among savers concerned about their future.
Uncertainty about the future of public pensions makes pension plans an interesting investment instrument. Furthermore, their current tax advantages and low costs have a significant impact on their long-term performance.
inbestMe and long-term investments
As you probably already know, at inbestMe we are specialists in long-term investment . Whatever your capital, we can design a personalized plan with which to start investing and watch your money grow.
As we said before, one of the determining factors in the risk/return binomial is the time horizon of the investment . If we are planning to spend a significant amount of money soon, we should only consider short-term options, in which liquidity is maximum.
However, if after making our calculations we come to the conclusion that we have sufficient solvency (and we have an emergency fund ) to invest for five or ten years without any surprises, it may be interesting to invest in the long term .
For many investors, long-term investing is neither better nor worse than short-term investing, it is simply different. On the one hand, it is a more relaxed investment, in the sense that it is not necessary to keep up with how the markets or industry data evolve.
But on the other hand, if history and statistics show rich people database anything, it is that long-term investments are the safest and most profitable of all.
Table of Contents
Where to make long-term investments
Index funds
ETFs
Pension plans
inbestMe and long-term investments
Where to make long-term investments
From our point of view, there are three products that can be exploited by investing in the long term: index funds, ETFs and pension plans .
Index funds
Index funds the great unknown in the national economy, with barely 2% of the total volume of assets under management. However, in other countries they are in full swing. For example, in the United States, where they already represent 40% of the total volume of investments.
Their great advantage is the disruptive nature of their approach: by replicating benchmark indices, such as the S&P500 or the MSCI World, they base their results on the evolution of the markets they imitate .
The success of index funds lies in the fact that in the long term, most global indices show an upward trend - the evolution of the last decades demonstrates this - so that regardless of volatility or what happens in the short term, in 5, 10 or 20 years we are assured of profits from our investment.
In addition, they have significant tax advantages , since we defer paying taxes until the moment of withdrawing the capital, which ultimately only maximizes our profitability.
ETFs
ETFs , acronym for Exchange Trade Funds investment vehicles very similar to index funds. Like the latter, they replicate the performance of a market and have even lower fees.
It is considered an exchange-traded fund, since unlike a conventional investment fund, it is listed on the market. This means that it can be bought or sold at any time, as if it were a share. .
However, they lose the tax battle against index funds. While index funds can be transferred without paying taxes, ETFs cannot. The Treasury applies the same regulations to them as to shares, so each purchase or sale has a tax toll.
Pension plans
Pension plans are another great long-term investment option , especially in Spain. With an inverted birth pyramid, this financial product is becoming increasingly important among savers concerned about their future.
Uncertainty about the future of public pensions makes pension plans an interesting investment instrument. Furthermore, their current tax advantages and low costs have a significant impact on their long-term performance.
inbestMe and long-term investments
As you probably already know, at inbestMe we are specialists in long-term investment . Whatever your capital, we can design a personalized plan with which to start investing and watch your money grow.