Friday, August 21, 2009

MasterHowto: Reasons Why Long Term Investments

Today’s financial hit is fairly worrying individuals to deal with investment. The decreasing consumption rates, lowering market trust, as well as the fluctuation of several principal commodities have caused psychological reluctance of the people to invest their money in stock market. In fact, there is an extent misunderstanding over the current situation of economic hit in relation to stock market investment especially the long term assets. People overly judge that the prevailing economic slump affects seriously the prospect of investment while the fact it doesn’t. If they knew well a few reasons why long term investment keep playing cool and safe, they would not need to worry about it this much.

However, today’s financial problem is unlike what happened to the US stock market in the late of 1920s when the so-called market crash took place due to the imbalance or stock value and real assets available at the selling stock companies. A level of market confidence is getting shown more obviously recently in spite of lowering consumption rates. The increasing stability of national security gives stronger stance for stock market to get better for future asset investments as well.

Though short term investments still face a little challenge to raise market trust after four quarters of glooming financial condition, long term investments are performing otherwise. The moving up long term investments is stimulated by the increasing global assurance to get out from crisis. In addition, the serious attentions of governments, inter-governmental organs, as well as international bodies to tackle the global financial slacks, have contributed to reinvigorate market enthusiasm. That’s why it remains prospective for individuals to spend some of their money for future benefits.

There are several reasons why long term investment perform best in the stock market today. The main point is that stock market plays the most beneficial role of investment instruments over decades. Yes, crash used to shock stock market a few decades ago. But it was simply a process of how market grew up to be much more established and stronger. Up until now, there has not been any faster growth of investment than stock market. It offers the top profit for owning a certain part of a company with a low risk of financial loss and market speculation.

The second reasons why long term investment perform best in the stock market is the fact that it is non-temporary assets management which is far from temporal market shocks. We cannot deny that the up and down of stock market is adhered to its existence and usually affects the company’s balance sheet. Since long term assets are minimally held during one year, temporal negative sentiment of market can just pass by our assets without deep impact of loss. Even if unexpected sinking price of stocks during the first quarter of investments happened, there would be another period of three quarters where companies can run after the increase of balance sheet. Hence, stability of assets value is maintained better through such long term investments.

To reap some profit from short term investments to cover day-to-day operations is somewhat teasing investor’s stand in common. However, investors have to consider investment safety first before the temporary profits. In this regard, long term investments would be the best option to choose.

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