Long Term Investment: Definition, Risks, and The Examples

Jun 12, 2022
investasi jangka panjang

There are several types of long-term investments that can be chosen to profit from in the future. However, not everyone is familiar with this term. Furthermore, there are still a lot of people who are not aware of what long term investment is, what kind of long-term investment plans are there, and what are the long-term investment examples.

To help with these queries, the following paragraphs will give some related overviews. Thus, anyone who plans to get this kind of investment will not get confused. For the details of the explanation, see the following paragraphs below.

What is Long Term Investment?

Long term investment is one of the ways to prepare for retirement. This investment is an attempt to run and rotate funds within a certain period. For example, 1 year, 3 years, or 5 years on an ongoing basis. Where the investment returns will be enjoyed when the term ends. So of course investments like this cannot be withdrawn at any time.

This type of investment is different in concept compared to short term investments. In short term investments, the time used to rotate funds is relatively shorter. Generally, in a matter of months. So that funds can be withdrawn immediately.

Also Read: Successful Young Indonesian Entrepreneurs Starting a Business from Scratch

Long Terms Investment Plans

capital gain

Capital gain (Source: Freepik).

It is not only necessary to know about what a long term investment is, but it is also important to know the suitable long term investment plans. Without a proper plan, the investment return may not be optimal. Therefore, it is recommended that anyone who plans to make an investment, it must be in accordance with the investment plans.

Long term investment plan is an attempt to identify a financial goal. Furthermore, this activity leads to choosing the most suitable investment instrument that comes with better risk and better revenue. It can be said that an investment plan is part of the investment strategy, which will help to define the best method and strategy in performing the investment itself.

Also Read: Short Term Investment: Definition, Risk, and The Examples

Long Term Investment Types and Examples

There are some examples of long-term investments that are quite attractive and can potentially give sizable profit in Indonesia.

For example, in the form of gold investments and stock investments. It is quite commonly chosen and easy to make investments. Many people all over the world invest their money in the form of gold or stocks. Another kind of long-term investment can also be found in the form of property or bonds.

Many people also decide to invest in property because land price will continue to rise in the future. The same thing happens to property prices that are getting higher over time, therefore property investment is also considered much more profitable.

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Long Term Investment Risk

As with other types of investments, long-term investments also have some risks. Naturally, these risks must be considered properly before someone makes an investment. One of the risks that may occur is inflation. Generally, this inflation makes the value of long-term investments not as optimal as planned.

Another risk that might occur is the fluctuation in the price of gold and the value of the shares purchased. Each type of investment may experience a decrease in value at any time which leads to unexpected losses. Therefore, it is necessary to carefully determine when is the right time to get the investment and when is the appropriate time to cash it. Long-term investments remain at risk even though this is less likely to happen.

One of the things that should also be put into consideration is the risk to the currency exchange rate. More or less this will generally affect the amount of investment value. For example, in stocks or gold, if the currency exchange rate falls in the market, automatically the price of gold and stocks will also decrease. Therefore, this must remain a consideration when choosing a long-term investment.

Also Read: Outstanding Female Investors and Entrepreneurs from Indonesia

Tips for Managing Long Term Investments

Long term stock investment (Source: Freepik).

Long term stock investment (Source: Freepik).

Of course, in conducting long-term investment management there are several important points that must be considered. Some tips for managing long-term investments are the following :

1. Determine investment targets well from the beginning

Choosing the type of long-term investment requires proper planning. So you should make sure what the target investment is from the beginning. In order to be able to calculate the type of investment that is profitable

2. Make investments patiently and carefully and carefully

It is very important to study each form of investment well so that you don’t make the wrong choice of investment.

3. Adapting to change

This can also be an important tip in managing long-term investments. Make sure to always pay attention to any changes from all the investments that have been made so that you can quickly anticipate and not suffer losses.

Those are the explanations regarding long-term investment. From an explanation of what a long-term investment is, what a long-term investment plan is, and what are some examples of long-term investments that can be quite profitable. Hopefully through this information, it will be easier to determine which investment is the most suitable for you.