Long Term Investment Stock

People invest in stocks, gold, commodities, etc., to derive some profits from them. Investments are planned as short term, medium term, and long-term investments. Short-term investments are necessary for some requirement in immediate future, such as planning for any repairs at home. Medium term investments are for meeting any need after a few years such as higher education of children. Long-term investments are essentially for meeting long term goals such as retirement.

The amounts invested in each of these types of investments also vary. Obviously, maximum will be invested in long-term investments, while lesser amounts will be invested in medium and short-term investments. In addition, risk profile of long-term investment would be lower without compromising on returns. This is because long-term investments should fetch returns that offset any negative impact of inflation.

Apart from inflation, long-term investment should generate ample surplus returns such that requirements at a future date can be met more easily and any losses in stock markets are negated. The options before investor for such long-term investment are gold, oil, technology, commodities, stocks, etc. Gold has been a traditional hedge against inflation. But is gold a good long-term investment? Not really. Gold as a long-term investment option fails because it can keep the value of investment intact, but cannot generate adequate additional returns. This is not good enough. Investor can only spare a percentage of his monthly or yearly income for any investment. This saving may be quite low, and would not suffice to meet monthly requirements in present value terms. Therefore, it cannot suffice in future either. Long term investing in commodities is also fraught with similar problems. Though oil long-term investments are good but future conditions are uncertain. There are liquidity and stocking issues as well with such investments. Investment in technology is also risky because technologies change very rapidly.

Because of the above problems, long-term investment stocks can be said to be ideal. People usually do not associate stock markets with long-term investments. However investing long term in the stock market can yield substantial profits. Long-term investment stocks qualify as class of asset that generates returns to cover inflation, as well as stock market losses, apart from generating additional funds to meet future requirements.

Long-term investment in stocks entails setting aside some amounts on regular basis, and not being perturbed by the stock market's ups and downs. In addition, the investor may choose to invest some addition funds, when best long-term investment stocks are down like during any bear rally. Effective return from long-term investment in good stocks can yield returns anywhere between 15 to 30 percent compounded annually.

Ideally, the best stocks for long-term investment are those that have been around for many years such as GE, Apple, and Microsoft, and have shown consistent growth pattern. They may not show any dramatic increase or decrease. Instead, they move steadily in the market, irrespective of trends. The growth pattern in best long-term investment stocks can be judged based on Earnings Per Share. A consistently growing EPS is an indicator that the company is performing well. Another factor to watch out for is the debt level. Some debt is essential for gearing benefit. But excessive can be bad, especially during recession. A ratio of long-term debt to equity near about 0.25 percent is good. Growth of long term investment stocks can also be assessed based on any contracts, expansion plans, etc.