How to Choose an Investment

This is the question people who are just starting out in the investment world ask a lot. And that’s why this article is relevant because there are a lot of people still who doesn’t know that. 

However before we talk about the answer to this question you need to firs decide if you are interested in Short Term, Medium Term or Long Term. Because choosing investments depends on you and what you are comfortable with. But for the most part it depends on how long you want to invest. With that being said let’s talk about Short Term, Medium Term and Long Term.

Short Term Investments

This one is about the money which you will need in less than 5 years. An example to this is your emergency fund as well as the savings for your vacation or a weeding if you have that in plans.

Emergency fund is an example here because you don’t really know when that emergency will come. 

Short term investments is the investment which you can the least put on the risk because the time  isn’t long enough if the investment field takes a dive. And when the investment takes a dive it usually take a while for it to get back up.

Medium Term Investments

In this one we are talking about the money which is expect to be needed somewhere between 5 and 10 years. The money might be needed for something like a house down payment or a purchase of a new car. 

With medium term investments you can sort of afford to take a little bit more risk with it than you could have with short term investments. You can afford more risk with medium term investments because you don’t really have a hard deadline for when you’ll need it.

Long Term Investments

And finally long term investments is the money you wont need fort at least 10 to 15 years. which means that you have a long time to spend on taking the risk.

Typically long term investments are something like college money for your newborn child or money for your retirement which is at least 20 years down the road.

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