When you are deciding on the best investment strategy to invest your money into, there are many different options to explore. One of the most important decisions you will need to make is to choose between long-term and short-term investments, and this choice will depend on your personal situation.
A short-term investment may suit you better if you may want to use the capital in the near future, however, there are more benefits to long-term investments, including:
Long-term investment: Less risk
Short term investments can be more volatile, with the risk of unexpected fluctuations. If you are looking at property investment opportunities, when you buy a property there is a chance that the value could decrease in the first couple of years. However, if you invested in the property for over ten years, the house price market history shows that any value dips will usually be reversed over this time and the property value would increase again.
Long-term investment: Less time-consuming
If you decide to invest in short-term projects, you will have to invest more time in getting the investments set up, negotiating details etc. With a long-term property investment, you would spend some time initially on getting your investment arranged but would have relatively minimal work to do throughout the long-term, while still receiving the financial gains.
For example, you purchase one property and arrange a long-term tenancy with a buy-to-let mortgage, rather than continually buying properties to refurb and sell on. With short-term investments, you would have to make time to research new opportunities, talk to investment companies and make the financial arrangements on a more regular basis.
Long-term investment: Less fees to pay
When you buy properties, you will usually have a number of additional fees such as stamp duty tax, solicitors’ fees, mortgage arrangement fees, broker fees etc. If you buy properties as long-term investments, you can reduce the amount of fees you would pay if you had to go through the purchase process on a regular basis.
Long-term investment: Allows your money to grow
With any type of investment, the longer you leave your money to grow, the bigger the ROI is likely to be. With property investment, the longer you own a property, the more the value will grow over time. If you decide to rent property out, whether that is residential, commercial, student or holiday accommodation, the longer you have the property, the more rent you will receive and therefore the higher ROI.
Long-term investment: Tax deductions
There are a number of different types of expenses and other tax deductions that are applicable if you invest in property, particularly over a longer period of time, such as repairs and maintenance, accountant’s fees, ground rents and landlord insurance.
When you are deciding on the best options for your investment, there are lots of other factors that you will need to consider as well, such as how much capital you have, how much experience you have in the specific investment strategy and what your plans are for the future. Some people prefer the fast-paced nature of short-term investments, even if it does not deliver the highest return on their investment.
If you are looking for new investment opportunities, speak to Advantage Investment to find the best type of investment to achieve your financial goals.
Email an investment consultant your query: Contact@advantageinvestment.co.uk
Call Advantage directly: 0151 433 9300
