Photos by Adobe Stock/Illustration by Bankrate
One of the best ways to secure your financial future is to invest, and one of the best ways to invest is over the long term. It may have been tempting over the past few years to deviate from a long-term approach and chase quick returns. But it’s more important than ever to focus on investing for the long haul while sticking to your game plan.
Investors today have many ways to invest their money and can choose the level of risk that they’re willing to take to meet their needs. You can opt for very safe options such as a certificate of deposit (CD) or dial up the risk – and the potential return! – with investments such as stocks, mutual funds or ETFs.
In fact, stocks were Americans’ second-most popular choice for long-term investments, behind only real estate, according to a recent Bankrate survey. Both categories feature prominently in the list below.
Or you can do a little of everything, diversifying your portfolio so that it tends to do well in almost any investment environment.
Overview: Top long-term investments in February 2023
1. Growth stocks
Overview: In the world of stock investing, growth stocks are the Ferraris. They promise high growth and along with it, high investment returns. Growth stocks are often tech companies, but they don’t have to be.
They generally plow all their profits back into the business, so they rarely pay out a dividend, at least not until their growth slows.
Who are they good for?: If you’re going to buy individual growth stocks, you’ll want to analyze the company carefully, and that can take a lot of time.
And because of the volatility in growth stocks, you’ll want to have a high risk tolerance or commit to holding the stocks for at least three to five years.
Risks: Growth stocks can be risky because often investors will pay a lot for the stock relative to the company’s earnings.
So when a bear market or a recession arrives, these stocks can lose a lot of value very quickly. It’s like their sudden popularity disappears in an instant. However, growth stocks have been some of the best performers over time.
Rewards: The world’s biggest companies – the Alphabets and the Amazons – have been high-growth companies, so the reward is potentially limitless if you can find the right company.
Where to …….