COMPARISON OF LONG TERM INVESTMENT AND SHORT TERM INVESTMENT

Investment is a term which is generally used by those who have surplus amount of money that has been left after fulfilling all of daily needs. However this is a very general definition but from business point of view, investment is something that will give you more output in the future if you spent some money at present. Generally there are two types of investments. These are long term investment and short term investment. The basic difference between both of them is the duration which is fixed and after which, the output is likely to be obtained in more expanded form. If we talk about short term investment then it is concerned with small duration. In general language, It is said that if you want to make good amount of money in small duration of time then this type of investment should be given priority. Example of such type of investments are investment funds, treasury bills etc. However, long term investment is concerned with the investment in which output is likely to be obtained after long period of time. The example of this type of investment is recurring deposit, retirement plan for future etc.
If you are saving your money from the current expenses and wishes to make some investment so as to get some expanded output in the future in the form of retirement fund or for your children’s education then you should not go at those place where you may be deceived financially. However you can simply choose some of the secure paths that will surely provide you with some well-brought-up output in the near future. Hence in such case long term investment plays a vital role as numbers of schemes have been opened by government bodies along with some private bodies. The basic scheme is concerned with the purchase of one bond issued by government. According to the type of your purchase bond, your initial investment will grow up over time and at last as soon as your bond collapses, you get the entire amount as a lump sum that you can simply bring in any use. Mutual fund is another type of secure scheme under long term investment. This is basically concerned with the purchasing of stocks or bonds by putting money together from numbers of peoples and then it is the responsibility of fund manager to manage all the investment and also to figure out the appropriate method in which the investment can be done so as to get maximum output.
However, short term investment is something that brings about an output against your invested money within a short span of time. However, this period may be varied from one year to ten years. Also these types of investments are very rare and difficult to find as these are likely to be associated with higher rate of interest. For an ideal short term investment, interest rate has to be higher because firstly it gets you the return amount in the form of out and profit within short duration of period and hence higher rate of interest need to be paid to the company so as to reach some profit to the company as well otherwise that company will go into the hell.