Long-term investing is all about making the right investments and being patient until you are ready to meet your financial goals! Investing for a long time enables you to enjoy several advantages like superior returns when it matures.
All you need to do is invest your money and forget about it until it matures. If you are looking to invest to meet your future goals, like buying a home or early retirement, then you can choose from a wide range of long-term savings plans or investment plans, depending on your financial goals and risk appetite.
What are the types of long-term investment plans in India?
In India, there are various types of long-term investment plans. Some of the most popular ones are ULIPs (Unit Linked Insurance Plans), PPF (Public Provident Fund), Stocks, Mutual Funds, Bonds, Gold, and Real Estate.
What are the pros and cons of long-term investing?
- a) Tax benefits
Investing your money for the long-term instead of opting for short-term investment options can provide you with tax benefits. For instance, investment in ULIP is eligible for a tax deduction under Section 80C. Usually, long-term gains (for investments held over 12 months) are taxed at rates below your income tax bracket.
- b) Risk
Investing your money for the long term mitigates your investment risk by eliminating all the lost opportunities. Investing and taking out money frequently can make you lose out on massive positive stock market events, making your investments less profitable. If you stay invested for a long time, then you can enjoy all the profits with fewer risks over time.
- c) Compounding
As an investor, time is your best friend. Investing for the long term allows you to enjoy the power of compounding or the chance to reinvest your profits and dividends to yield even greater profits.
As every coin has two sides, even long-term investments have their cons!
- a) Can’t withdraw your funds
When it comes to investing your funds for the long term, you cannot withdraw your funds any time you need. You need to wait for the market to rise and then decide. If there’s an emergency or you need funds urgently, then long-term investments wouldn’t allow you to do so. Hence, you must be wise while choosing your long-term investment plans.
- b) Fees and charges
Everything comes at a price! You must note that investments incur fees and charges for trading and holding your stocks safely. Owing to the slow profit rise of long-term stocks and charges incurred, you might feel like you aren’t making any profits in the beginning. Later on, you will notice a significant gain in profits.
- c) Lack of control over your funds
When it comes to long-term investments, you have less control over your money as it is invested for a long time, and you must wait for it to mature.
In case of long-term investments, the pros outweigh the cons. If you have saved enough money for financial emergencies and don’t need to touch your investments for a long time, then long-term investments can help you achieve your dreams and goals over time!
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