When you invest money, you can choose short term investing or long term investing.  Each has it’s place in investing. You need to understand the difference between the two before you can use them effectively.

Short Term Investing

The short term is usually within 6 months or less. This means if you buy a share of stock and sell it within the next six months, you have made a short term investment. This is the case not just when buying stock. It includes all investing within that time frame.

Short term investing could be as short as minutes. Often day traders buy and sell very quickly. This is for a quick gain and not long term earnings. For wealth building over time, you will need long term investing.

Long Term Investing

Long term investing is when you make investments that last longer than six months. You might sell some investments after a couple years or hold on to them for decades. What you do with them will depend on your research and analysis of your investments.

Long term investing is often referred to as buy and hold. It is a strategy where you buy investments and hold onto them over a long term. You are looking to increase your wealth over time, not just make quick cash.

Which Strategy should you Choose?

This will depend largely on what your motives are. If you are looking to save for retirement, for example, long term investing is a great strategy. If you want to make a full time job out of it, you might want to try trading.

I am not recommending you take on day trading as a career. That is a big decision, as is taking on any new career or business. Make sure you know exactly what you’re getting into before you go further in that direction. Short term trading is very risky, and it’s hard to come out on top, let alone break even.

Long term investing is a great strategy to build wealth. Instead of buying and selling investments all the time, you spend your time and effort researching a small number of investments and putting confidence in them. Sell only when you feel it’s necessary and buy only when you know it’s a great buy.

Before you start any kind of investing, learn about the types of investments you are interested in and become an expert in them. This will help you avoid simple mistakes. Also, learn about risk and how to use it wisely. During your investing days, sometimes you’ll lose money and sometimes you make money. Keep that in mind and make good choices if you want to work toward making good money-making decisions.

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