Investing For Beginners – Free Investment Articles and Tutorials

Investment term means the time period for which an investment is done. There are three types of investment terms first is short term investment second is mid term investment and third is long-term investment. Short-term investment is an investment done for a short period of time. Life span of short-term investment is of about one to two years. Mid term investment is an investment longer then short-term investment. Life span of mid term investment is around two to three years. Long-term investment is an investment done for longer time period in order to finance his/her long-term goals. Minimum time period for long term investment is five years. In many cases long-term investment does not have any maturity date.


There are several types of short-term investments, including: Money market funds, U.S. Treasury bills, Certificates of deposit (CDs) and, Commercial paper.

Pro’s and Con’s

The negative points associated with short-term investment are that short-term investment can expose an individual to greater degree of inflation risk. Prices of goods and services go up, the return on short-term investments may not keep pace and hence, reducing individuals buying power.

If individual sells shares and stocks frequently then the person has to keep paying tax every single year. Money, which could have been working for individual in the market, goes in tax instead. But positive point associated with short-term investment is that they tend to fluctuate very little in value over time. If individual needs to access his/her funds quickly, there’s less risk that the value of your investments will have dipped dramatically when individual need to “cash in” his/her shares.

The negative point associated with long-term investment is that economy can change dramatically in a few years, and there’s no guarantee of what will be the state of economy after few years. Positive point associated with long-term investment is the tax advantage. The imposition of capital gains tax favors a long-term investor. The reason for this is that individual only becomes liable to pay capital gain tax while selling the shares. If individual does not sell investment he/she will never become liable for the capital gain tax, that money stays invested and continues to compound.

The difference between short-term and long-term investments lies in the company’s motive to acquire them. Short-term investments consist of stocks, bonds, etc. a company has bought and will sell shortly. The investments made under long-term investments may never be sold. Company will most likely continue to hold them forever, regardless of the price they are selling for in the open market.

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