Thursday, August 20, 2009

MasterHowto: Investing Big Money for Long term or Short Term?

Given the financial meltdown in the second quarter of last year, market stability is still in the efforts of moving up to a better performance level. The collapse of stock price of giant companies in the US that eventually caused the screw up face of market and business world should be borne in every individual mind of the investors. The so called “good start” of Obama administration to overcome the worsening effects of economic downturn, has brought fresh clout in the financial market and contributed to the increasing trust of among investors as well. However, serious trouble just happened and is still clearly recorded in mind. Simple advice from the last financial turmoil would be carefulness is a must when we would like to start investing big money in the ‘hot’ stock market.

Lots of things have to be considered when we would like to invest money in stock market. There are two options of investment possible; long term investment, short term investment. Both carry different benefits and disbenefits of course. Long term investment has got better stand when temporal conditions of financial market doesn’t show a chance to make economic gains. As the investment is held by a company for at least one year, investing big money for long term will be a good option and bring more share profits as soon as the term is done. However, the rate of value will depend much on the revenue that could be made by a company during a course of investment period. Such limitation of economic gains makes investors reluctant to have long term investment in spite of better guarantee on the asset safety.

Short term investment is likely sexier than the long one. The up and down of stock price is potential to reap huge profit from the short term investment. Despite the risk is definitely high, the potential gain to make is more interesting somehow. That’s why some investors apply certain strategy to manage their portfolio investment. Value investment strategy is normally used to analyze the declining stock price in market in relations to the earning ratio. The declining stock is bought with cheap price from the companies accordingly. The main point to see here is the extent of feasibility of the declining stocks to recoup in the near time. Once the recouping stock price takes place, inventors will find their assets ten times bigger than it was.

Investing big money for one of the two options, long term and shot term, is okay as long as each form is managed properly. To invest big money for long term period is safer from temporal market shock. Yet, when this done at bad performing companies, it would not give any good prospect nor profit. One year period of investment or more is not a short time. Declining revenue and income could happen anytime when not really good companies are the place of investment. On the other hand, short term investment in stock market is somewhat risky without good strategy and smart broker to help execute the trading. Either investing big money for long term or short term will be depending on how investors manage their assets well.

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