A lot of people look to investing in stocks as a way to make money quickly. But this might not be the best way to invest for people who want to get money back quickly. If you want to save up money over a long period of time, investing in stocks is the best way to do it. One example is putting money away for future needs, like saving for retirement.
Both short-term and long-term investments in stocks come with risks, so nothing in the stock market is really guaranteed. Today could be very good and tomorrow could be very bad, leading to big gains or big losses. But when it comes to long-term investments, statistics show that there are no 20-year portfolios that have lost money on the stock market. The average return has been about 10%, and all of these accounts have a wide range of stocks in their portfolios.
The market is very risky in the short term. The market will go up and then down, so this is not the best way to invest if you only want to do it for a short time. This is not a good choice if you are getting close to retirement age and are just starting to invest in stocks. Instead of stocks, stable investments like bonds and other cash instruments are the best way to protect yourself from inflation in these situations. In the short term, this is more stable than stocks.
So, how long does "short term" last? Many people think that "short term" means "less than a year," but that is not the case. When it comes to stocks, short term means five years or less, though some people will suggest more than the minimum of five years. A good rule of thumb is to not invest in stocks if you will need the money within the next five years. Another thing to keep in mind is that short-term investments don't make sense unless you trade a lot. If the money is being used to save for retirement, it is also not a good idea to be an active trader.
Some markets go down for about a year on average, but it has happened that it goes down for much longer. If you are a long-term investor, this downtime may seem like forever, but it will pass. If you are a short-term investor, you will lose a lot if the market changes. Investing in stocks will give you a lot of great chances, but if you only invest for a short time, you could lose a lot of money. If you know that you will need to use the money you are investing soon, choose investments that are safer and more secure. You could get lucky and make a lot of money, but the risks are high, and you could also lose everything.
