investment in itself conjures subliminal doubt and fear in our minds.
And it’s quite
difficult to arrive at a common conclusion, because the relevant risks depend
on a large number of factors, the most common of them, being the length of time
you wish to keep your money out of your pocket and in the stock market.
Tax rates are
tricky and an investor has to carefully calculate the tax rates for his
investment, because sometimes it is possible that the tax you’ll pay may
drastically affect your bottom line, and making potentially large capital gains
not worth the investment in the first place!
The tax rates in
your long term investments aren’t lumped with your income rate, and thus it
becomes quite easy to figure out how much you’ll owe at the end of the
In short term,
however, the investments are lumped with the rest of the money you’ll make that
year, and thus making it a little costly in the long run.
A capital gain
is the core income that you earn out of an investment.
The capital gain
from short term investments aren’t much – they won’t earn you a lot of money,
because short terms are usually for investment plans that last less than a
year. However, the short term plans are much less risky.
investments are more risky – they involve leaving the money that you earned out
in the market for atleast a year and for as long as you wish. Sometimes, people
might want to re-invest the gains they get back into the long term plan, as
well. Although this is risky, the added reward is that the returns that you get
out of a long term plan is much, much higher, and it will surely add on to your
let’s say that whether you chose short term or long term goals depends on the
goals you have for yourself.
If you’re in for
a quick win, and you want to take your money out as soon as possible or
whenever you wish to – go for short term investments.
On the other
hand, if you’re willing to be patient and are looking for investments that have
the potential to drastically increase your net worth – you need to go for long
Written by: BALAKARTHIGA.M