The benefits of a long-term investment strategy - Learn to invest | Freetrade (2024)

Like a fine wine or whisky left to mature, when it comes to investing, a long-term investment strategy could be one of the best options to help you achieve your goals.

That’s because when it comes to growing the value of your investments, time is the key ingredient. Time allows you to worry less about short-term stock market movements and focus on the longer-term appreciation stock markets have generally offered investors.

There’s no ‘get rich quick scheme’ with stocks. By knowing this in advance you can craft a portfolio that’s built to withstand the test of time, across market ups and downs.

Starting with a solid foundation doesn’t guarantee investing success. But, it should give you a better chance of building wealth.

What is long-term investing?

The term gets thrown around a lot, but what exactly is a long-term investment?

As a rule of thumb, you should be willing to hold any investment for at least five years.

In an age of TikTok-length attention spans and same-day deliveries, this may feel like a lifetime. When you invest you try to think in decades if you can.

Depending on what you are investing for, your definition of ‘long’ will likely be different to someone else’s. Ideally, it’s great if you can stretch your investing timeline as far as possible.

Advantages of long-term investing

Investing with a strategy built to last has a few perks.

Here are some of the main reasons why investors think long-term with an investment portfolio:

  • Growth - more time for your portfolio to potentially benefit from compound interest.
  • Smoother - the ability to ride out short-term stock market volatility.
  • Fewer emotions - help you avoid any hasty decisions in reaction to market movements.
  • Efficient - saves you time as you don’t have to keep making more and more f trades.
  • Affordable - you can invest small amounts on a regular basis and still build wealth.
  • Cheaper - fewer costs if your investment account charges trading fees or commissions.

Long-term vs short-term investments

One of the best ways to see the benefits of long term investments is with an example.

Here’s what investing £250 a month could look like when you plan to leave it alone for up to five years, compared to a much longer time frame.

For this example, we’ve assumed your investments will grow at a 5% each year, but in reality some years it could be more and others less.

Short term

Number of years Estimated return
1 £3,150
2 £6,458
3 £9,930
4 £13,577
5 £17,406

Long term

Number of years Estimated return
5 £17,406
10 £39,620
15 £67,972
20 £104,158
25 £150,340

Past performance isn't a reliable indicator of future returns. Your investments, and the income you receive from them, may go down as well as up so you may get back less than you invest.

Long-term investment strategies

Now that you’ve seen the benefits of long-term investing, we’ll take a deeper dive into some potential investing strategies.

Minimise your investing costs

Even small fees and commissions can really eat into your potential long-term investment returns.

There are plenty of unknowns when it comes to investments. But, the broker and product you choose is something you can control. Using an app or platform that minimises your costs is a key part of any long-term investing strategy.

Here’s an example of how costs can make a big difference to your portfolio over the long run:

Years Free 0.5% 0.75% 1%
10 £39,620£38,524£37,987£37,459
25 £150,340£139,712£134,722£129,935

This example uses a £250 monthly investment, with growth estimated based on various fees and 5% growth.

This is just for illustration purposes and remember, a 5% yearly return isn’t a guarantee. But, it shows you how much money you could be leaving on the table when higher fees apply.

It’s these differences that mean long-term UK investors are often hunting for the lowest fees possible when researching the best broker to use.

And while having the lowest fees shouldn’t be the only thing you take into account, over time costs add up, so don’t just take a ‘low cost’ platform’s words for it.

Understand your time horizon

There are no rules that state you must own stocks for the long term, but a well-considered buy and hold strategy is often the best course of action.

However, your individual investing goals and circ*mstances are going to help you determine how long you plan on holding stocks.

For example, you might be aiming towards one of the following goals:

  • Saving for your first home or for a second property.
  • Creating enough wealth to be financially independent or to work part-time.
  • Earning enough to pay for higher education, for your children or grandchildren.
  • Building a sizeable retirement pot.

Working backwards from when you’ll want to use the funds in your portfolio, should help you plan and position your portfolio.

Don’t try to time the market

Your investment portfolio is likely to fluctuate in value quite a lot over time. Afterall, stock markets are designed to move and reflect new information.

Success stories might lure you into trying to jump in and out of the market but unless you’ve got a crystal ball to hand, this is a risky manoeuvre.

You may get lucky once, but over the long-term, the data shows jumping in and out of markets is likely to bruise not boost returns.

Rather than thinking in big moves, often the best strategy is to invest small and often. This results in dollar-cost averaging and means that you’ll be purchasing stocks when the prices are rising, and when they’re falling.

By doing this, over time you tend to be able to smooth out your entry prices. Sometimes you might end up overpaying, but you’re also likely to buy the dip if the market falls.

Invest as early as you can

As the famous saying goes, ‘the best time to plant a tree was 20 years ago. The second best time is now.’

Having time on your side really helps give you more investment options. But, seeing as we haven’t yet invented a DeLorean that can travel back in time, it’s worth maximising the time you do have.

Starting to invest as soon as you can is a good approach to take with the stock market.

The longer you have, the more chance you’ll benefit from the magic of compounding.

And while investing comes with risks, thinking long term will also allow some room for error.

You’ll have longer to recover from mistakes. Or, potentially take on more investment risk in search of higher rewards.

Best long-term stocks

There’s no such thing as a stock for the long term or short term.

Start by thinking about what you’re trying to achieve and then find investments that fit in with your plans.

Often, the secret ingredient for successful investors is to invest regularly into a diversified portfolio.

If you need a refresher on getting started with investing, make sure you take a look at our guide on how to buy shares for beginners.

Not all of the types of stocks outlined below will suit your investment blueprint but it’s always good to know your options. Your goals and attitude to risk, will generally mean you dial up or down different types of investments in your portfolio.

Growth stocks

Stocks that promise future growth can be a good place to start if you’ve got one eye firmly set on the future.

Growth stocks are those that are expected to grow at a faster rate than the market average. They tend to be younger firms and may not always be profitable yet.

Money they do make is often channelled straight back into growth efforts rather than paid out as dividends.

Many tech stocks fall under the growth category and that means the way investors make money from them is through capital or share price appreciation.

The downside when investing in companies that promise jam tomorrow, is that it can be difficult to value or put a price on them. There tends to be more uncertainty around, so while there’s the potential for greater rewards, there’s more risk.

Dividend paying stocks

With a stock that pays dividends, you get some of the benefits of owning a stock today as well. Dividend stocks tend to already be profitable companies, after all this is where the dividend payment comes from.

One of the best things about receiving a regular dividend income is the potential to boost your compounding returns by reinvesting dividends.

Dividends aren’t guaranteed and income you receive from investments can vary just like share prices do. You only have to look back to the height of the pandemic to see that dividends can be taken away.


ETFs (exchange-traded funds) are often a popular investment option for long-term investors.

That’s because when you invest in ETFs, the fees can be lower than active funds, or if you were to replicate the funds investments yourself.

On top of this, you can benefit from diversification as one ETF will give you access to a basket of stocks.

Investing this way can be less time-consuming, involving a lower level of effort than if you were to individually pick your investments and stocks in a portfolio.

This is why ETFs are regularly touted as one of the best investments for beginners.

But, there are some downsides to bear in mind.

You’re unlikely to beat market returns over the long term because most ETFs passively track an index or sector. And, although you get some in-built diversity, with any single ETF you may still be overexposed to a particular sector or region.

The market-cap weighting also means that the biggest companies tend to get the bulk of your investment. So you could miss out on growth from small and mid-cap stocks.

Investment trusts

Investment trusts have been around for a long time and some of the big players have remained a popular choice for years.

Investment trusts are funds (they also allow access to a basket of stocks and other assets through one investment) but they are set up and trade like a share on the stock market.

Trusts are actively managed to a specific investment objective that could be growth, income, or a bit of both. They also might be specialists in one area, perhaps an industry, long-term theme, or a country.

Trusts (like other companies listed on the stock market) have a fixed number of shares at any time, which means portfolio managers don’t have to worry about selling underlying investments when someone wants to take money out of the fund. This allows them to invest with a longer term time horizon than other types of funds and remain invested.

The drawback with investment trusts is that the expert management comes with a fee, as we mentioned earlier, fees detract from your investment returns.


Real estate investment trusts are mostly known by their shorter name ‘REITs’. They provide a way to invest in property without some of the usual obstacles.

When you buy REIT stocks, you’re essentially buying a piece of a property portfolio.

As a shareholder, you’re rewarded with dividend income that generally comes from renting out the properties in the portfolio. REITs actually have to pay out a certain amount of their income to shareholders each year.

Many REITs concentrate on certain niches such as warehousing, data centres or office blocks. Growing industries that need a home for the long term is a good way to sort through REITs.


This yellow metal has been used as a store of value for centuries.

But, the case for gold is not always as solid as you might imagine. Gold has often acted as a store of value over protracted periods, but the price has also been flat or volatile for big chunks of time.

Sometimes investors pile into gold without making a proper assessment. Gold can be a useful element of your investment portfolio, but don’t rush in thinking it’s guaranteed to appreciate.

The other downside with gold is that it doesn’t provide any sort of income, you’re reliant on the price. One way around this is to look at investing in gold and metal miners.

This can give you somewhat of a buffer, the potential to earn some dividends, and access other precious metals like silver.

If you’re dead set on investing in gold, you have multiple options when investing in commodities.

You can buy an exchange-traded commodity (ETC) that tracks the price of physical gold. Or, you might want to look into a gold mining ETF that invests in major mining companies.

How to analyse stocks for long term investing

When building your diversified portfolio, learning to analyse and evaluate stocks is an important skill to work on.

You don’t have to become an expert analyst either, understanding the basics will carry you a lot of the way and allow you to make better long-term decisions.

Understanding whether a company looks like a good or bad investment, should help you weigh up ETFs and investment trusts too.

Here are some key things to think about as you start to investigate different companies:

  1. Growth - have a think about what factors could drive business growth over the next 5, 10 years and beyond.
  2. Fundamentals - get a solid understanding of the business, learn how they make money and who their competitors are. Is it profitable, can they grow those profits?
  3. Debt - find out if the stock has any major debt obligations that could hamstring its long-term performance.
  4. Consistency - have a look at how the company performed over time. How do you think the stock will perform under different economic conditions, the good and the tougher?
  5. Valuation - have a think about what the business is worth and how much you are willing to pay for it. Our guide to valuation can walk you through this.

Popular stocks for the long term

Before we get stuck in, it’s important to highlight that this is a wrap-up, not a suggestion or recommendation that you buy or sell any of the securities mentioned. It’s a list based on the most popular stocks with Freetrade customers last year.

Remember that everyone has their own goals and unique financial circ*mstances. These, along with your tolerance for investment risk and time horizon, should inform the mix of assets in your portfolio.

Our resource hub for investing in the stock market might be able to help make that blend a bit clearer for you and our guide on how to invest in stocks is a great start for first-time investors. And if you are still unsure of how to pick investments, speak to a qualified financial advisor.

1. Tesla (TSLA)

Tesla stock has had a busy few years and continues to be a key player in the fierce EV market.

Its popularity on and off the road led to it becoming the most-bought stock of 2021 on the Freetrade platform.

While considered to have good growth opportunities by many as the world moves towards low carbon transport, Tesla has a few things to watch out for. Firstly, largely due to higher costs thanks to rising commodity prices. And, there are plenty of competitors hot on Tesla’s heels.

The Freetrade app allows you to buy fractional shares of some US stocks. Here’s some more info on how to buy US shares in the UK.

2. Lloyds (LLOY)

Lloyds was the most popular UK share on Freetrade last year.

We expect that’s becuase of it’s dividend paying heritage, although as you know, no income is ever guaranteed.

And while Lloyds has been around in one form or another for hundreds of years, it’s not the past that’s important, it’s the future.

As the UK’s largest mortgage provider, the bank is well placed to benefit from long term housing market grwoth and the UK’s desire to own their own home.

In the near term, it could also benefit in an environment with rising interest rates. However, this may also work against the firm if higher rates lead to a major downturn in the property market and people unable to pay mortgages.

3. Legal & General (LGEN)

L&G is another oldie but it was the eighth most popular British share on the Freetrade app in 2021.

Life as a big insurer, if done well, tends to be a lucrative one. Being one of the largest life insurance providers in the UK also means that a large part of the customer base are committed long term.

4. Vanguard S&P 500 UCITS ETF USD Acc. (VUAG)

This is often one of the most traded ETFs on the Freetrade platform and was the most popular US ETF on the app last year. And with the market turbulence 2022 has seen some investors keen to capitalise on lower valuations.

The benefit of the accumulation version of this ETF is that income gets rolled back in. So, over the long run, you don’t have to worry about reinvesting dividends yourself.

5. Vanguard FTSE All-World UCITS ETF USD Acc. (VWRP)

Using a global equity ETF could be a good way to get exposure to for getting expsoure potential growth opportunities from all over the world. This particular stock was the most popular global ETF on Freetrade in 2021.

ETFs can be an easy way to get long-term exposure to different sectors and trends from across the globe.

A big challenge with ETFs is that they aren’t selective so there may be some companies you’d rather not own. They also are designed to move inline with the market, so if the market drops they will too.

6. Scottish Mortgage Investment Trust (SMT)

Scottish Mortgage was the most-bought investment trust on Freetrade in 2021. However, after a stellar few years, Scottish Mortgage (along with many other tech-related investments) has entered a tougher patch.

SMT’s investing approach aims to of find the disruptors of tomorrow. However, the management team behind this investment trust aren’t pie in the sky dreamers, they go digging across the globe and in both the public and private markets.

Private markets come with added risk, so SMT is often preferred with the more adventurous long-term investor.

7. City of London (CTY)

This investment was the seventh most popular investment trust on Freetrade in 2021. It’s also the oldest trust in the top 10, suggesting it really is run with a long-term view, adapting to differerent times.

The trust has managed to keep up a good dividend track record, raising dividends for the last 55 consecutive years. Remember though, past performance doesn’t dictate future results and dividends aren’t guaranteed either.

Its approach may need to shift as the economy changes over time. But this could be an excellent long-term investment option if it can successfully adapt.

8. iShares Developed Markets Property Yield UCITS ETF USD Dist. (IWDP)

Finding individual REITs to invest in can involve a lot of legwork and a deep understanding of a particular property niche.

One way to get long-term exposure to property is by using a REIT ETF investment.

This developed market REIT contains roughly 300 individual investments and aims to generate at least a 2% dividend yield. A level which should be manageable over a long time frame. But, it’s important to understand that property investing comes with its own unique risks.

9. iShares Physical Gold ETC (SGLN)

For the gold bugs out there, this ETC was the most popular option on Freetrade in 2021 in terms of exchange-traded securities that track the long-term price movements of gold.

It’s worth remembering though, the price of gold however is far from stable, so expect plenty of volatility coming your way.

10.iShares Gold Producers UCITS ETF USD Acc. (SPGP)

If you still want to follow the yellow brick road but prefer the idea of companies producing gold, there are still ETF options avilable. This was the most popular gold related ETF on Freetrade last year.

It contains just over 60 holdings and tracks the performance of stocks in the S&P Commodity Producers Gold Index. As a result, it provides a useful way to spread your bets across a of gold related stocks.

Do keep in mind that if these companies make poor decisions, your investment could still suffer, even if the price of gold is doing well. But, it’s a relatively diverse long-term investment option somewhat tied to the performance of gold.

Long term investing in a stocks and shares ISA

We invest to try and do more with our money.

And while it might not seem like a biggy, the account you choose to keep your investments in can make a big difference to your goal.

Using a stocks and shares ISA is one of the best ways to create a tax-efficient portfolio in the UK. While tax efficiency might sound a bit dull, it’s something that’s totally in your control and if ignored could see you paying unnecessary charges.

The main benefit of an ISA is that you won’t need to worry about paying UK dividend income tax or capital gains tax (CGT) on your investments. And, when drawing on your investments, funds withdrawn from your stocks and shares ISA won't be subject to income tax either.

When it comes time to start taking money out of your ISA, all withdrawals are tax free. So you get to keep more of any investment gains you make.

The ISA allowance for the 2023/24 tax year is £20,000. You can invest all £20,000 in a stocks and shares ISA or spread it across different ISA accounts, perhaps a cash ISA or Lifetime ISA.

Making the most of your ISA allowance each year is likely a really important step in building your wealth over the long term.

ISA eligibility and tax rules apply. Tax relief depends on your personal circ*mstances and current rules can change.

Investing with a long term approach for your retirement

Depending on your age, investing for your retirement will typically be a lengthy affair.

If you’re in your 20s, 30s or 40s, investing for a retirement that’s still years away makes the process automatically long term.

When you invest in a SIPP, you’re not able to access that money until you turn 55, likely to rise to 57 in 2028. And, given lots of us are working longer or have other sources of income in retirement like the State Pension or our workplace pension, often we don’t access our SIPP until much later on in life.

Given this time frame, pensions are built for long-term investing. This means you can often afford to take more risk, dialling up the share portion of your pension when you’re younger, as you have more time to ride out the ups and downs of the market.

Another major benefit of SIPPs is the opportunity to get tax relief (a government boost to your pot) on money you put into a SIPP.

The UK government sets limits on how much we can each contribute to a pension and get tax relief. Most savers can add up to 100% of their earnings or £40,000 (whichever is lower) to pensions in a year and benefit from the tax efficiencies.

You can add more than this to a SIPP, it just won’t attract the same tax relief and you could face a tax charge.

More on pension tax relief.

SIPP eligibility and tax rules apply. Tax relief depends on your personal circ*mstances and current rules can change.

Why consider long-term investments

Having time on your side is a real advantage in investing.

You’ve got more time to give your investments the opportunity to grow, you can afford to take more risk, and you should be less sensitive to short-term market movements.

Long-term investing is about having a game plan and sticking to it. And while you’ll need to be open to changing your portfolio at points, there’s unlikely to be regular chopping and changing.

Important information This should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice.

When you invest, your capital is at risk. The value of your portfolio, and any income you receive, can go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future results.

Eligibility to invest into an ISA and the value of tax savings both depend on personal circ*mstances and all tax rules may change.

Freetrade is a trading name of Freetrade Limited, which is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales (no. 09797821).

As a seasoned financial expert with extensive experience in investment strategies, I can affirm that the article provides a comprehensive overview of long-term investing, emphasizing the benefits, strategies, and various investment options. The concepts covered are fundamental and align with established principles in the field of finance. Here's a breakdown of the key concepts discussed in the article:

  1. Long-Term Investing:

    • Definition: Holding investments for an extended period, typically at least five years.
    • Rationale: Allows for potential compound interest, smoother ride through market volatility, fewer emotional reactions, time efficiency, affordability, and cost-effectiveness.
  2. Advantages of Long-Term Investing:

    • Growth: Capitalizing on compound interest over time.
    • Smoother: Riding out short-term market fluctuations.
    • Fewer Emotions: Avoiding impulsive decisions based on market movements.
    • Efficient: Saving time and reducing the need for frequent trades.
    • Affordable: Investing small amounts regularly to build wealth.
    • Cheaper: Minimizing costs associated with trading fees or commissions.
  3. Long-Term vs. Short-Term Investments:

    • Example: A comparison of investing £250 per month over short-term (5 years) and long-term (25 years) periods, illustrating the potential benefits of compounded returns.
  4. Long-Term Investment Strategies:

    • Minimizing Investing Costs: Emphasizing the impact of fees on long-term returns and the importance of choosing a low-cost platform.
    • Time Horizon Consideration: Aligning investment goals with the desired holding period.
    • Avoiding Market Timing: Discouraging attempts to predict market movements and advocating for a consistent, long-term approach.
    • Early Investing: Encouraging starting investments as soon as possible to benefit from compounding and allowing room for recovery from mistakes.
  5. Best Long-Term Stocks:

    • Growth Stocks: High-potential stocks expected to outpace market average growth.
    • Dividend Paying Stocks: Stocks providing regular dividend income, often from profitable companies.
    • ETFs: Exchange-Traded Funds offering diversification and cost-effective exposure to various sectors.
    • Investment Trusts: Actively managed funds trading like stocks, providing access to diversified portfolios.
    • REITs: Real Estate Investment Trusts, offering exposure to property portfolios.
    • Gold: Investing in gold or gold-related stocks for wealth preservation.
  6. How to Analyze Stocks for Long-Term Investing:

    • Factors to Consider: Growth potential, fundamentals, debt obligations, consistency, and valuation.
  7. Popular Long-Term Stocks (Based on Freetrade Customer Data):

    • Examples: Tesla, Lloyds, Legal & General, Vanguard S&P 500 UCITS ETF, Vanguard FTSE All-World UCITS ETF, Scottish Mortgage Investment Trust, City of London, iShares Developed Markets Property Yield UCITS ETF, iShares Physical Gold ETC, iShares Gold Producers UCITS ETF.
  8. Long-Term Investing in a Stocks and Shares ISA:

    • Tax-Efficient Investing: Utilizing Stocks and Shares ISA for tax advantages, including no dividend income tax or capital gains tax.
  9. Long-Term Investing for Retirement (SIPPs):

    • Lengthy Time Frame: Emphasizing the suitability of long-term investing for retirement planning.
    • SIPPs (Self-Invested Personal Pensions): Highlighting the benefits of tax relief and the potential for higher risk tolerance.
  10. Importance of Long-Term Investments:

    • Time Advantage: Allowing for growth, risk-taking, and resilience against short-term market fluctuations.
    • Game Plan: Having a well-thought-out strategy and sticking to it with occasional adjustments.

This summary provides a glimpse into the depth of knowledge covered in the article, reinforcing the importance of a long-term approach in building wealth through strategic investments.

The benefits of a long-term investment strategy - Learn to invest | Freetrade (2024)


The benefits of a long-term investment strategy - Learn to invest | Freetrade? ›

Investing long term cuts down on costs and allows you to compound any earnings you receive from dividends.

Why are long term investments beneficial to investors? ›

Investing long term cuts down on costs and allows you to compound any earnings you receive from dividends.

What are the benefits of investment strategy? ›

Investment strategy advantages

Investment strategies can help you make quick decisions about whether or not to purchase an asset for your portfolio, reducing decision fatigue and the fear that you've made the wrong choice.

What is the goal of a long term investment strategy? ›

Long-term investors tend to balance the overall risk of their portfolios by owning a diversified mix of stocks, bonds and cash. Over longer periods, proper diversification can help to increase the likelihood that you'll have some assets that gain value even while others decline.

What are the benefits of long term investing as opposed to short term investing? ›

Potentially less risk

With a short-term outlook, there is often the temptation to pull money out at the first sign of trouble, taking the hit, but not taking the time to recover. A long-term outlook offers the potential for a calmer experience and a stronger investment return.

What is a long-term investment quizlet? ›

Held-to-Maturity Investments. Bonds and notes that an investor intends to hold until maturity. Long-Term investments. Any investment that does not meet the criteria of a short-term investment; any investment that the investor expects to hold longer than a year or that is not readily marketable.

What are the benefits of long-term and short-term investments? ›

Long-term investments tend to outperform short-term ones due to the power of compounding. They offer higher growth potential, lower transaction costs, and favourable tax treatment. Additionally, long-term investing allows investors to ride out market fluctuations and benefit from overall market growth.

What is the most successful investment strategy? ›

Invest for the long term

Time is on the side of the investor and a buy-and-hold strategy usually produces better results in the long term.

Which investment strategy is better and why? ›

Diversification is the best investing strategy

Diversifying helps investors reduce their overall risk by spreading out their investments in different stocks, as well as different asset classes such as bonds and property.

What are the benefits and risks of investing? ›

Investing in stocks offers the potential for substantial returns, income through dividends and portfolio diversification. However, it also comes with risks, including market volatility, tax bills as well as the need for time and expertise.

What is the key to long-term investment? ›

Setting clear investment goals, diversifying your portfolio, understanding risk and reward, investing in quality companies, harnessing the power of compound interest, taking a long-term approach, regularly reviewing and adjusting your investments, managing emotions, staying informed, and seeking professional guidance ...

What is long-term investment planning? ›

Key Takeaways. A long-term investment is an account a company plans to keep for at least a year such as stocks, bonds, real estate, and cash. The account appears on the asset side of a company's balance sheet. Long-term investors are generally willing to take on more risk for higher rewards.

What is long-term investment decision? ›

The long-term investment decision is referred to as the capital budgeting decision. It relates to the investment in fixed assets, e.g. buying a new machine.

What are the advantages and disadvantages of long term and short term investment? ›

Long-term investments can provide steady growth over an extended period, but they require patience and dedication. On the other hand, short-term investments offer greater liquidity and potential for quick returns, but they come with higher risks and require active management.

Why long term investing is better than short term? ›

Long-term investor time horizons are generally 10+ years, while the time horizon for short-term investors is less than 3 years. With longer-term time horizons, investors can introduce security types that may have greater short-term volatility but more potential for growth over time.

What is an advantage of taking out a long term instead of a short term loan? ›

Smaller monthly payments – Due to the higher funding amounts, most long-term loans have smaller monthly payments compared to short-term loans. A smaller payment can be helpful to businesses that need some extra cash flow to help run their business but don't have the resources for an expensive monthly payment.

Why is long-term debt important to investors? ›

It can provide the funds needed to finance expansion, acquisitions, and other strategic initiatives. For shareholders, long-term debt can be a source of stability and income.

Why long-term investing is better than short term? ›

Long-term investor time horizons are generally 10+ years, while the time horizon for short-term investors is less than 3 years. With longer-term time horizons, investors can introduce security types that may have greater short-term volatility but more potential for growth over time.

Why are long-term assets good? ›

A long-term asset benefits a company for a year or longer. Land, buildings, and equipment are long-term assets because an organization will use these assets for more than a year. Long-term assets are not products sold to customers; businesses use them to generate revenue.


Top Articles
Latest Posts
Article information

Author: Zonia Mosciski DO

Last Updated:

Views: 6207

Rating: 4 / 5 (51 voted)

Reviews: 90% of readers found this page helpful

Author information

Name: Zonia Mosciski DO

Birthday: 1996-05-16

Address: Suite 228 919 Deana Ford, Lake Meridithberg, NE 60017-4257

Phone: +2613987384138

Job: Chief Retail Officer

Hobby: Tai chi, Dowsing, Poi, Letterboxing, Watching movies, Video gaming, Singing

Introduction: My name is Zonia Mosciski DO, I am a enchanting, joyous, lovely, successful, hilarious, tender, outstanding person who loves writing and wants to share my knowledge and understanding with you.