Investment means different things to different people, especially when considering the number of investment options available in this era. There are many different investment products, or vehicles, because there are many different people with many different needs, just as a family with five children has different needs than a single person or a farmer.
Here are some of the best long term investment products that you can add to your investment portfolio:
1. Commodities such as gold or precious metals.
For decades since the introduction of the gold standard, gold is viewed as a safe investment. It is supposed to act as a safety net when markets slump since the price of gold is independent of market prices. Therefore, it is often used to hedge portfolios against riskier investments.
However, it is worth noting that gold is not an entirely safe investment. If history has taught investors anything, the price of gold does not always follow an upward trajectory, mainly when markets are in the green. Investors usually return to gold when there is bearish market sentiment, and they expect the market prices to decline.
Although prices of stocks can swing significantly in either direction, if investors do their homework right, buying shares from the right companies can be massively beneficial in the long run. Of course, this type of investment requires investors to conduct their due diligence, as picking a publicly-traded firm that will be profitable in the future is important to churn out a steady stream of profits from the investment.
Investing in small market capitalisation companies is riskier but can bring in excellent returns if they become successful, as the value of their shares could significantly appreciate. Then again, only a handful of select few can identify the potential in such firms. With that being said, it is recommended for amateur investors to keep their eyes on the more well-known companies.
3. Real estate
Many investors are convinced that real estate is one of the safest and most stable investments out there. Their reasoning is that property prices have skyrocketed for many years. Hence, it is not surprising to see people with spare capital investing in properties as their investment stands a chance of rising in value in the future.
If you are just an entry-level property investor, never throw caution into the wind because you do not know whether you are in a property market bubble and whether that bubble will burst any time soon. Although the chances of property prices will soon decline sharply are low, it is still worth keeping a close eye on the investment.
Our generation is captivated by the hype surrounding cryptocurrencies. But, perhaps the most interesting cryptocurrency almost everyone is talking about right now is bitcoin. Bitcoin does not have a physical presence – it exists solely in the digital world. In November 2018, the total market capitalisation for bitcoin fell below $100 billion for the first time since October 2017, and the price of bitcoin fell below $4,000, representing an 80% decline from its peak the previous January. The value of bitcoin is governed by the classic economic mechanism of supply and demand.
As of now, bitcoin is struggling to reclaim its all-time highs since topping $64,000 in April. In the following month, it came under pressure after Tesla CEO Elon Musk mentioned that the company will cease using Bitcoin as a form of payment after concerns of the cryptocurrency’s impact on fossil fuels surfaced. This shows that cryptocurrencies are highly volatile investment products that can appreciate and depreciate at a moment’s notice.
If you are looking to invest in cryptocurrencies but are not ready to take the plunge, a forex tutorial is a good starting point. A course on trading foreign currencies can teach prospective bitcoin investors that the crypto market’s volatile behaviour is ultimately due to the lack of regulation in place.
Final 2¢: Focus on wealth creation, not wealth preservation.
Long-term investing means accepting a certain amount of risk in the pursuit of higher rewards. This generally implies equity-type investments, like stocks and real estate. They tend to be the ideal long-term investments due to their potential for capital appreciation.
The investment products highlighted above are unquestionably some of the best long-term investments to think about. However, some investment products are riskier than others. Therefore, having a diversified investment portfolio and researching investments comprehensively is imperative if you wish to create wealth in the long run.