Overview of Long Term Investments Finance Essay

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Investment is a field where by people that excess of money to invest or 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 us more output in the future if we spent some money at present. Basically, there are two types of investments which 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 discuss about short term investment then it is concerned with small duration. In general language, It is said that if we want to make better amount of money in small duration of time then this type of investment should be given priority. The example that can express the type of investments is investment funds, treasury bills and other. Other than that, long term investment is concerned with the investment in which output is likely to be obtained after long period of time. The type of investment that can show is recurring deposit, retirement plan for future etc. In general if we are saving our money in the current expenses and hoping to make certain investment so as to get some expanded output in the future for security in the form of retirement fund or for our children’s education then we should not go at those places where we may be deceived financially. However we can simply choose some of the secure paths that will surely provide us with some well-brought-up output in the near future. In addition, 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. Based to the type of our purchase bond, our initial investment will grow up over time and at last as soon as our bond collapses, we get the entire amount as a lump sum that we 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 control 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 our 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 us 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.

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Long term investment definition:

Long-term investment can be define as an account that the asset side of one company’s balance sheet which are represents the investment that a company in long tends to hold for more than one year. The long term investments are include stocks, bonds, real estate and cash. Form the investopedia stated that the long term investment account differs largely from the short term investment account .The different between short term investment is the short term investment is easy to be sold, while the long term investments may never be sold. Usually this investment is occurs when for example company A invest largely in company B and gains give positive influence over company B without having a majority of the voting shares. Based on this situation, basically the purchase price would be shown as a long – term investment.

Importance of Long Term Investments

As we know it is important to us to make some investment in long term investment. Long term investment is a way to make us to prepare to promise us to have brighter future. As time is past we will not be able to work forever for the whole life. No matter how healthy we are, there will come a time when we will not be able to work, due to health problems or simply aging. This is why planning our long term investments carefully is so important. Second is, Maybe we often think that we will be able to rely on Medicare and social security to take care of us during our retirement. But we should precaution, because usually what we expect and hopes will not exactly what will happen in future. As we know social security is in trouble and danger. Politicians are trying to repair the problem, but chances are in another twenty years, or even less, there will be little to nothing left for you in the social security budget. Lastly , we never know what the future is going to hold. We will never know will us stay healthy or, will us have some serious medical expenses that we will need to have finances for in the future. Long term investments give us the security to know that in dire circumstances, money is there.

Long term investment strategies

In preparing for us to have security in the future, we should realize that we are need to start looking into long term investment. We should know how to start and analysis the types of investment that we want to choose. We also have to know which investment are the best long term investments. In this stage we should know whether we should to use broker or do it by our own.

Start the Long term investment by Setting Goals

As with many other type of investing, we should make proper long term investment starting by setting proper goals. We must put some target on how much that we want to have for preparing to face moment when we are retired. We should plan at what age do we want to retired. Besides we also should know how much we should invest monthly to reach the goal. Other than that we also should choose the right firm. If we decide to seek help looking for our investment, we have to proper choosing the right firm is really important. We have to make the right decision in choose a firm that will follow our investment goals. The firm is responsible to find the best investment for us. We will feel like we are in control with the firm help.

Long Term Investments for the Future

In making money for our planning in the future we can invest money for a future event and purposes, such as retirement or a child’s college education, and we might have several options. Basically we do not allow investing in risky stocks or ventures. We can easily invest our money in ways that are very safe, which will show a decent return over a long period of time. First and foremost we should consider the bonds. There are various types of bonds that we can purchase in order to invest our money. Bond’s are similar to Certificates of Deposit. Instead of being issued by banks, however, bonds are issued by the Government. Depending on the type of bonds that we can buy, in many times, our initial investment may double over a specific period of time. Mutual funds are also relatively safe. Mutual funds exist when a group of investors put their money together to buy stocks, bonds, or other investments. A fund manager typically decides how the money will be invested. All you need to do is find a reputable, qualified broker who handles mutual funds, and he or she will invest your money, along with other client’s money. Mutual funds are a bit riskier than bonds. Stocks are another vehicle for long term investments. Shares of stocks are essentially shares of ownership in the company you are investing in. When the company does well financially, the value of your stock rises. However, if a company is doing poorly, your stock value drops. Stocks, of course, are even riskier than Mutual funds. Even though there is a greater amount of risk, you can still purchase stock in sound companies, such as G & E Electric, and sleep at night knowing that your money is relatively safe. The important thing is to do we should research before investing our money for long term gain. When purchasing stocks we should choose stocks that are well established. When we look for a mutual fund to invest in, choose a broker that is well established and has a proven track record. If we aren’t quite ready to take the risks involved with mutual funds or stocks, at the very least invest in bonds that are guaranteed by the Government.

There is no unique investment opportunity which offers long-term saving:

Lots of investment that offer opportunities will allow us to determine our own investment period. Regular saving accounts may offer higher interest rates or annual bonuses if we do not make withdrawals. Many of the accounts and investments which support long-term saving are those which offer other benefits such as tax-free saving or stock-market linked returns. The main types of long-term saving investments are Bonds, Pensions, Savings Certificates and Individual Savings Accounts (ISAs). These accounts and investments are available from most banks and building societies. A Bonds are essentially certificates which confirm that we have made a loan to a company, or to the government, in that we have invested money in them without receiving a share in their profits a share certificate in exchange. These bonds can either be repaid to us at an agreed time with interest, or repaid to us at an agreed time based on their stock market-linked value. There are a variety of bonds available for investors, and each type has its own terms, conditions, and associated risks. It is important to decide whether we are prepared to risk the capital we invest, and if so, how much risk we are willing to accept. There are a range of bonds available which offer greater security, usually these are not dependent on the stock market for their value or returns, and our original investment will be increased in line with inflation to ensure our capital retains its buying power. Gilt-edged stocks or GILTS are government bonds. Essentially these are loans to the government, which they guarantee to repay after the investment period. In return for our loan, the government pays us fixed returns on our capital, twice a year throughout the investment period. Gilts are seen to be extremely safe investments, since it is unlikely that the government will file insolvency and be unable to repay our money. However, gilts are also bought and sold on the stock market and thus their value can rise or fall. We are not guaranteed to receive all our capital at the end of the investment period. Gilts can be purchased for investment periods of between one and fifty years. They are usually purchased for periods of five, ten, or thirty years. We can choose to keep our bond for the duration of its investment period or sell it, usually without charge. The name of the gilt will indicate its maturity date and its rate of return, for example, 5% Treasury Gilt 2020. Returns will be paid on gilts every six months: the rate of return quoted is the annual rate of return, and so every six months a payment will be made to the value of half the quoted rate. For 5% Treasure Gilt 2020, a 2.5% pay pension is a type of long-term savings plan which enables people to save specifically for their retirement. Any UK resident can join a pension scheme and both the pension holder and their friends and relatives can contribute to the savings fund. Our pension scheme provider will claim tax relief from the government on the contributions we make, which means that for each one hundred pounds of pension fund we have we need only contribute seventy-eight pounds. Upon reaching retirement we will be entitled to a tax-free lump sum, usually equal to approximately 25% of the total value of the fund. The rest of our pension fund will be used to buy an annual pension, or annuity, for us from an insurance company. Besides, since pensions are designed to help people save sufficient money for their retirement, it is impossible to access the money in our pension fund until we reach the agreed retirement age, currently age fifty and set to rise to age fifty-five from 6th April 2010. This means that if we begin contributing to a pension scheme aged twenty, we will usually have to wait for thirty-five years before we are allowed to access the funds. However, this ensures that the money we save for our retirement years will be available when you come to retire Further more, National Savings and Investments, or NS&I, is also one types of long term investment that can be define as a savings and investment service backed by Her Majesty’s Treasury. In general, they offer a range of investment options, including savings certificates. These types of investment certificates come in two varieties which are fixed interest and index-linked. They are fully guaranteed by the Treasury and are tax-free. They are offered for fixed-investment terms of two, three or five years and allow a minimum of one hundred pounds and a maximum of fifteen thousand pounds to be invested. They differ in their security and their potential for capital growth. There are typical benefits and drawbacks associated with every account.

Advantages:

Potential for high investment returns Variety of options available, including share and cash investment Generally secure, though risks vary depending on specific investment Often guaranteed fixed-rate returns Combinations available which enable long-term investment with tax-free returns

Disadvantages:

Money is usually invested for long period of time Penalties for withdrawing money before end of agreed investment period Fixed-rate returns may prove poor offer if average interest rates increase Capital invested may be at risk

Comparison Between Bonds and Stocks:

Bonds and stocks are remaining same because both investments can provide way to earn more money. However, both bonds and stocks also have features and characteristics that make them distinct.A  The primary difference between the stocks and bonds is that stocks rely on current market conditions.A  In current market, if the market were to fluctuate in either direction, stocks would be affected by going up or down. Bonds do not depend on market movement and because of this they are a safer way to invest.A But the level of return on financial investment would generally be less with bonds. Basically, the reason that people purchase bonds is as an investment.A  However, it is important to understand that bond investing does not provide a short-term return on investment.A  Instead, it takes years for bonds to mature.A  Additionally, to be successful with bond investing, it is imperative that bonds be allowed to mature.A  That way, you would make the most money possible, which is the whole idea. In most situations a bond could be sold prior to reaching maturity.A  While you would still be paid the value of the bond at that time, you would not receive any interest.A  Therefore, the amount of money made on the bond would be far less than if you had allowed it to mature so interest could accrue.A  Keep in mind that when bonds are handled properly, they offer an excellent investment opportunity but it is important for them to be purchased from the right organization or entity and that you leave them alone so they can mature.

SUMMARY:

Solar Power: Brighter Long-Term Investment Outlook

Energy standards requiring U.S. utilities to use solar power could drive growth for companies ranging from inverter makers to installation financiers

In coming years with utilities adopting standards to increase the amount of solar-generated electricity, the U.S. could bolster its presence in the global solar-power market. According to a few professionals, the rapid growth pace could present attractive opportunities for investors. Indeed, the main reason the U.S. solar market lags Europe’s is that the federal government has consistently failed to commit to a long-term policy offering financial incentives to power providers, without which solar cannot yet compete with such cheaper sources of electric generation as coal and natural gas. Even Europe is moving toward smaller rooftop installation, utility-scale projects are fast becoming the focus in the U.S. and are the most likely way for the U.S. to catch up with the leading solar markets. With so much uncertainty surrounding incentives at home and overseas, the fact that more countries are adopting renewable energy standards and planning to build solar plants has analysts and some fund managers feeling more confident about the industry. Moreover, in long term of period the US country may be on track and become a more dominant market by 2014 as solar power long term investment. The US solar power industry will be as strong as Japan and Spain. Besides that, this brighter future will enhance the solar industry for retail investor to buy into. The investor also expected to invest in solar industry. Other than that, the solar industry will make the investor chances to choose a better long term investment and compare it to other investment industry in the field.Total solar capacity must reach 6Gw by 2020, and 9.5Gw by 2025, in order for the 16 states with solar carve-outs to meet their targets, according to projections by the Lawrence Berkeley National Laboratory, which is part of the U.S. Energy Dept. That’s expected to be a key driver of revenue Solar installation financing is another potentially big area for investment.In January, SolarCity signed a deal with Pacific Gas & Electric (PCG) under which the California utility will provide $60 million in tax equity financing for solar installations in U.S. homes and businesses in exchange for lease revenue from Solar City customers, as well as federal investment tax credits and local rebates. Other than that,Solar City’s financing options let homeowners and businesses change to solar power with no up-front investment, in future they can start saving on energy costs right away. The company’s goal is to be a national brand and become publicly traded, although that is a few years away. Banks such as Rabobank have also begun to establish tax equity funds. As solar energy becomes more prevalent, Pfund believes more utilities will be attracted to the financing model in order to avoid losing some of their biggest customers, who will move to solar because of how much power they consume. Investors need to maintain a lengthy time horizon in betting on the growth of the solar industry. Solar is the new 30-year Treasury bond and It is a nice, conservative investment. Better return promises than owning a Treasury bond growth for manufacturers of PV panels and related materials.

Implication of Solar Power

According to this article, the US is one who wants to increase the amount of solar generated electricity in coming year. Based on the increase of solar investment industry it could give good potential effect and enhance rapid growth pace and will promise present attractive opportunities for investor. Whenever the US installed the solar power, the impact from this circumstance it will lead to the growing at a faster pace than that of the international market. Moreover, in long term of period the US country may be on track and become a more dominant market by 2014 as solar power long term investment. The US solar power industry will be as strong as Japan and Spain. Besides that, this brighter future will enhance the solar industry for retail investor to buy into. The investor also expected to invest in solar industry. Other than that, the solar industry will make the investor chances to choose a better long term investment and compare it to other investment industry in the field. In addition, in solar financing option is one of the potentially big areas for investment. The solar financing option will let the home owners and business switch to solar power with no upfront investment, so they can start saving on energy cost high away. For example, the banks like Robobank have begun to establish tax equity fund. Solar energy will become more prevalent. Besides, the analysis outlook believes more other utilities company will attracted to the financing model in order to avoid losing some of their biggest customer who will move to solar power industry because they expect much power they will consume. As a conclusion, Solar is the new 30 year treasury bond ,it is nice ,concretive investment but promises better return than owning a treasury bond.

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Overview Of Long Term Investments Finance Essay. (2017, Jun 26). Retrieved November 30, 2022 , from
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