What will change the world over the next 20 years? And if you think you know, are you willing to put money on it? Long-term changes to factors such as population, climate and technology will shape investment returns for decades and identifying them early is the Holy Grail for investors. No one knows what’s around the corner, but here we’ve sought to identify some big investment plans that look likely to generate rich returns over the next couple of decades – and warn against getting carried away in the pursuit of them.
There are long term investments – An account on the asset side of a company’s balance sheet that represents the investments that a company intends to hold for more than a year. They may include stocks, bonds, real estate and cash. The long-term investments account differs largely from the short-term investments account in that the short-term investments will most likely be sold, whereas the long-term investments may never be sold.
A common form of this type of investing occurs when company A invests largely in company B and gains significant influence over company B without having a majority of the voting shares. In this case, the purchase price would be shown as a long-term investment. Explaining here the top 3 types of long term investments – stocks, bonds and mutual funds whose return is going to remain safe for the next 20 years.
When you invest in stocks, you’re buying a share of ownership in a corporation and become a shareholder. Companies sell shares of stock to raise money for start-up or growth.
There are two types of stock:
- Common stocks – Shareholders have a percentage of ownership, have the right to vote on issues affecting the company and may or may not receive dividends.
- Preferred stock – Shareholders are generally entitled to dividends at specified intervals and in predetermined amounts, but they don’t typically have voting rights.
- Investment returns and risks for both types of stocks vary, depending on factors such as the economy, political scene, the company’s performance and other stock market factors.
When you buy bonds, you lend money to the government or to a company. Bonds are issued for a set period of time during which interest payments are made to the bondholder. The amount of these payments depends on the interest rate established by the issuer of the bond (the government or company) when the bond is issued. This is called a coupon rate, which can be fixed or variable. At the end of the set period of time (called the maturity date), the bond issuer is required to repay the par, or face value, of the bond (the original loan amount).
Bonds are considered a more stable investment compared to stocks because they usually provide a steady flow of income. But because they’re more stable, their long-term return probably will be less when compared to stocks. Bonds, however, can sometimes outperform a stock’s rate of return, depending on the particular stock.
Keep in mind that bonds are subject to a number of investment risks including credit risk, repayment risk and interest rate risk.
It is a type of investment wherein you join other investors and corporations to form a massive fund which will be handled by an expert/professional who is called fund manager for diversified portfolios of stocks, bonds, securities, money markets and other mutual funds. In MF, you buy shares of the investment company thus that makes you a shareholder and gives you shareholder’s right including voting power and opportunity to receive dividends.
Many people have wrong understanding about Mutual Funds: They think all Mutual Funds invest in Equity Share Market or Mutual Funds are Equity Share Market Related Products and hence “Risky”. fact is that, mutual fund is just but the” Medium” of “Method” of investment .Through this medium of ‘Mutual Funds’ investors can indirectly invest in different ‘Asset Classes’ – Debt Securities. Depending on in what asset a mutual fund invest in –
- Equity Mutual Fund: If it invests in ‘Equity Shares’
- Debt Mutual Fund: If it invests in ‘Fixed Interest Bearing Instruments’ or Debt Instruments
- Gold Mutual Fund: If it invests in ‘Gold’
- Hybrid (Balanced) Mutual Fund: If it invests in Equity & Debt or Equity, Debt & Gold, or Equity & Gold