October 12, 2018

Investment series: short term versus long term

One way to classify investing strategies is to take into account the time horizon. Long term versus short term is often discussed by financial experts, analysts and portfolio managers. One type of strategy by no means is better than the other. We may take the Oracle of Omaha Warren Buffet, who buys stocks and holds them indefinitely (and makes billions of $). On the other hand, there is speculator George Soros, who can keep his speculative position short term, just a few days and still make hundreds of millions of dollars as a result. Let us briefly cover the strategies and look at an alternative way to invest short term.

The difference of timing and expectations between the investments

A long-term investment will constitute investments, comprising stocks, bonds, real estate, and cash, that are intended to be held for more than a year. The long-term investments differ from the short-term investments in that the short-term investments will definitely be sold, sooner rather than later, whereas the long-term investments may never be sold.

Long term investments are those that have the likelihood to increase your profits over a long period of time. Those maybe index funds, stocks, long term government bonds. They tend to appreciate over the long haul and can withstand sharp and prolonged downtrends as an investor holding specific long-term instruments would not sell them when the financial markets are temporarily falling. Payout expectations are long term.

Short term investments will typically not last longer than a year and the investor holding financial instruments will look to convert them into cash any time opportunity presents itself. Payout expectations are short term. Among short term investors would often be traders or speculators that may hold their portfolio positions from a few hours to a couple of days. This is, naturally, increases risks as predicting daily or weekly fluctuations of any market is highly speculative and tremendously difficult thing to do. These types of investments may include: currencies, options, short term government bonds, stocks (for day trading) and etc.

Long term investors do not panic at short term market swings that go against them. Markets are cyclical. They go up and down, and then up again. On the other hand, those who have higher short-term expectations and take upon themselves higher risks should cut their losses quick when the market goes against them.

Investing in Short term business loans for small businesses

Short term investments may be not only securities, commodities, real estate or bonds but also loans for businesses. Alternative fintech companies such as Debitum Network, not only help for SMEs to get funding for their operational costs but also gives both individual and institutional investors opportunity to participate in the financing process, invest in those loans and earn quite attractive annual interest at the same time.

Maturity terms for those loans typically last from a few weeks to 6 months. Annual interest is within the range 10-15%. Considering that a lot of investors cannot beat stock index returns, which is 8%, or even the average of mutual funds, which is 5%, 10-15% is really attractive.

Other advantages:

  • Amounts are flexible. You can start with 10 Euros. The maximum is 10 million Euros.
  • You may invest in an asset even if the repayment day is a few days away.
  • Possibility to choose assets from various industries: Logistics, Wholesale, Manufacturing, Services to name a few.
  • Portfolios should match the style of any investor: conservative, moderate and aggressive.
  • All assets on the platform have a guarantee.

Below is the snapshot of 4 assets from our platform. You can invest in any of them. If you want to find out more what each item on the asset bar means and how to invest, you can read this blog post.

4 assets from the platform

If you got interested, try our platform: https://platform.debitum.network


Disclaimer: It is important to point out that the approach presented here is not necessarily suitable for everyone and is presented for information purposes only. It is not intended to be investment advice. You should seek a duly licensed professional for investment advice matching your specific situation.

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