People set aside a certain portion of their income and invest the amount in an appropriate investment scheme with the objective of earning a return or interest. However, the main concern of these people is market volatility regardless of which investment scheme they invest their money in. Market volatility simply means the magnitude by which the price of the investment changes over time. Another way of looking at market volatility is in terms of price swings. The more frequently and greater the price of an investment swings, the more volatile it is. Investments, which are volatile, have a higher degree of risk because their prices are unstable.
The investment experts at Foster Financial Services Inc emphasize that short-term volatility of an investment does not necessarily indicate a long-term trend. These experts explain that investment, which is volatile on a daily basis, may show signs of growth and stability in the over an extended period. Some investments are able to maintain their purchasing power over a long period but may fluctuate in the short-run.
For people who are confused as to why they should opt for long-term investments, these investment specialists will explain that such investments show a lower volatility as compared to other investments. Moreover, long-term investments are more likely to weather low periods in the market when compared to other forms of investments. The experts at Foster Financial Services go on to state that investments that have higher short-term volatility risks tend to have higher returns over an extended period. However, this is not the case with less volatile investments.
These investment experts will tell you that investing your money in a long-term investment has many tax advantages as compared to a short-term investment. Capital gains on long-term investments are generally taxed below your income bracket. This is not so in the case of short-term investments. Moreover, it is possible for you to save on transaction cost in case of long-term investment in shares.
The investments professionals at Foster Financial Services Inc explain that long-term investments are a viable option for people who want to save money to fund their children’s higher education. Even those who want to maintain the same or higher standard of living when they retire should seriously consider investing their money in long-term investment schemes. People looking to save money to buy their dream house should invest in an appropriate long-term investment scheme so that they can get adequate funds on maturity.
The investments experts at Foster Financial Services emphasize that it essential for any investor to read the terms and conditions of the investment document before investing his money in any scheme. He/she needs to assess his/her investments needs before committing himself/herself to any investment. These experts go on to explain that the investment needs of two different individuals will never be the same. You need to assess your own profile to determine your risk tolerance and desired returns from your investment scheme. It is only then that you can make a prudent decision on whether to opt for the investment scheme or not.