Investments That Need To Be Part Of A Long Term Strategy

One of the fundamental principles of investing is to invest with only the money you will not need in the short-term. In other words, do not use your mortgage payment or rent money to invest with. In my opinion that is called gambling. So, by the very nature of investing, you should be prepared to part with your money for an extended period of time.

Although there are some investments that can be profitable in the short term, like investing in real estate or collectibles, investors should focus on investments that will deliver returns “down the road.”

Bonds

A time tested strategy for making money investing in bonds is called “rolling down the yield curve.” This strategy involves buying longer dated bonds and selling them after twenty four to thirty six months, to profit from their rise in value during the first few years. This investing strategy is profitable for two reasons: the longer term bond pays more interest than the shorter-bonds, and the longer-term bond will rise more in value over time.

Exchange Traded Funds

Because exchange traded funds, more commonly known as ETFs, can be economically acquired, held, and sold, some investors invest in ETF shares as part of their long-term investment strategy. With just two or three ETFs, you can create a portfolio that covers nearly the entire equity market, as well as a large portion of the fixed-income market.

Shipping Containers

The shipping container is one of the most important contributors to the growth of world trade. Because the lifetime of a cargo container is more than 10 years, investing in shipping containers is regarded as a long term investment. During this decade-long period, investors can expect to earn a monthly return based on the performance of their container fleet.

The purpose of a long term investment plan can be to supplement an investor’s income during unemployment or retirement, or protect an investor’s portfolio against a worse-case scenario. In either case, it is important to focus on investments that deliver consistent performance, over a long period of time. This approach will work to preserve and build wealth.

Where Would Investors Invest To Earn Income For Retirement?

As investors move closer to retirement, they begin to reflect deeply on the investments they have made, and the money they have earned. The focus for most at this point is to supplement their modest monthly income, while they are retired. Among the leading choices for investment income are dividends, interest payments, and business revenues.

Dividends

A sum of money that is paid regularly by a company to its shareholders out of its profits or reserves is called a dividend. Typically distributed quarterly, and decided upon by the board of directors, dividends can be issued as cash payments, as shares of stock, or other property. Dividend payments may be structured as a one-time special dividend, or as a source of ongoing cash flow to owners and investors.

dividend payout

In many countries, the income from dividends is taxed at a more favorable rate than ordinary income. Investors seeking tax-advantaged cash flows, like retirees, may look to dividend-paying stocks in order to take advantage of potentially lower tax rate.

Interest

A payment from a deposit-taking financial institution to a depositor of an amount above the principal sum deposited is called interest. The interest is paid on money held in savings accounts, certificates of deposits, or other such investments. Interest income is usually taxable and, in most instances, the ordinary income tax rate applies to income generated from interest.

Business Revenue

Another way for investors to earn an income from their investment money is to invest in business opportunities. One of the best examples of this approach is investing in shipping containers. Under these circumstances investors purchase shipping containers that are then leased to shipping companies, and generate a monthly income based on their utilization.

In Review

With retirement lasting longer and longer, investors must choose investments that will continue to earn additional money for them each month. This is particularly important when you stop to consider the rising cost of living, and the looming threat of inflation. These two adverse conditions can quickly eat away at the value of an investor’s returns on investment.

To address the challenges posed by economic uncertainty, investors have begun to revise their investment portfolio to include more income generating assets. Whether it be dividend, interest, or business income, the investment community is preparing for an easier retirement, supported foremost by a strong residual income stream.