Long Term Investments for Retirement Consider Real Estate

The most important reason for a person to consider investing their hard earned cash in to something, is in the hopes of receiving a much higher rate of profit when it comes to selling their purchase. This could be a car, a house or even a business. These types of investments are categorized in to two sections. The first is known as a short term investment, where a lender will provide an agreed amount of money with the intention of receiving a profit when their investment’s value improves. The second type of investment is known as a long term investment and that’s what we’re going to discuss in detail throughout this article and is usually an investment for high income earners.

Long term investments are considered a lot more risky than short term investments, as the money will usually be spread over a specific amount of years and the potential for profit will depend on the performance, quality and value of the specific thing that has been invested in. So let’s imagine that you’ve decided to invest in a house that’s worth $150,000. You’ve invested $50,000 for renovations and you’d like to either rent or sell the house in the future.

If you opted for the renting route, you could expect to receive a set sum per month or year, as tenants live in the accommodation. As you’d be receiving financial payments on a monthly basis in most cases, this type of investment would be ¬†considered long term, as the payments will continue to flow until the contract ends.

Another option would be to sell the home immediately after renovations are complete. This would be considered a short term investment as there would be a one off payment that wouldn’t continue in to the future, even if you turned a profit that would benefit you well in to your later years. The reason that it would be considered a long term investment is if you waited for decades until the market had shifted and the price of properties had risen. This would allow you to sell the property for a potentially much higher amount of money.

The downside or risk-factor to this sort of investment is that there’s no guarantee that the prices of homes will rise, in fact they could even decrease. So to make a more secure long term investment, it’s recommended that you set yourself a specific sell-date. This could be a during a specific month, year or even sometime within the decade.

These sorts of investments don’t just apply to homes; you could purchase a piece of fine art and then rent it out to museums and art galleries. The galleries would technically be renting your purchase, so you’d be receiving a sum of money based on what it was that you were providing. This would be considered a long term investment, so as you can see, the main difference between short and long term investments is the amount of time that you can expect to receive profit from your original investment; making long term investments ideal if you’re hoping to gain a bit of extra cash as you near retirement age.¬†http://centuriataxastute.com.au/investment-bonds-for-retirement-planning/