Choosing investments based on your timeline
February 20, 2026
The right investments for you are closely tied to when you expect to use the money. Strategies that work well for short-term needs—such as upcoming expenses or near-term purchases—often aren’t appropriate for goals that are years or decades away. Investments designed for long horizons usually involve more ups and downs along the way, but they also tend to offer greater growth potential compared with short-term options.
What does “long-term investing” mean?
A long-term investment is money you commit toward a goal that’s not imminent. Your willingness to take risk should generally correspond with how long you can stay invested. Since markets fluctuate and losses can occur at any time, shorter time frames may not allow enough time for a recovery before you need the funds. With a longer horizon, investors can often look past short-term market noise and stay focused on future objectives such as:
● Retirement
● Paying for a child’s or grandchild’s education
● Purchasing a primary or second home
● Starting or expanding a business
Long-term vs. short-term investing
When you invest with a long runway, your portfolio has more opportunity to recover from temporary declines. This flexibility often allows long-term investors to accept higher risk in pursuit of higher returns. By contrast, short-term goals typically call for more conservative choices that prioritize stability over growth, such as:
● Money market funds
● Short-term certificates of deposit (CDs)
● CD ladder strategies
● Short-duration bond funds
● Treasury bills or notes with near-term maturities
Regardless of time frame, diversification remains essential. Spreading your money across different asset types can help reduce the impact of any single investment. Your overall mix should reflect your personal goals, financial situation, and comfort with risk.
Common long-term investment options
Below are several investment types often used for long-term goals.
1. Stocks
Buying stock means owning a small piece of a publicly traded company. As a shareholder, you may receive dividends, and if the company grows over time, the value of your shares may increase.
Advantages
● Strong potential for long-term growth that may exceed inflation
● Dividends can provide income or be reinvested for additional compounding
● Many stocks are highly liquid and easy to trade
Drawbacks
● Prices can fluctuate significantly
● Returns are not guaranteed, and losses are possible
How to invest
You can purchase stocks through a brokerage account, use an automated investing platform, or work with a financial advisor.
2. Long-term bonds
Bonds represent loans made to governments, municipalities, or corporations. Long-term bonds typically mature in 10 to 30 years and pay interest over that period.
Advantages
● Regular interest payments, often twice per year
● Generally less volatile than stocks
● Lower risk than equities, depending on credit quality
Drawbacks
● Returns may not keep up with inflation
● Prices can decline when interest rates rise
● Some bonds can be called early, limiting expected income
● Lower-quality bonds carry higher default risk
How to invest
Investors can buy individual bonds or gain exposure through bond mutual funds or ETFs for diversification.
3. Long-term certificates of deposit (CDs)
CDs pay a fixed interest rate in exchange for committing your money for a set period, sometimes up to 10 years or more.
Advantages
● Lower risk compared with market-based investments
● Often offer higher rates than savings accounts
● Predictable income and defined maturity dates
Drawbacks
● Inflation may erode purchasing power
● Limited liquidity if sold before maturity
● Callable CDs may be redeemed early, reducing expected returns
How to invest
CDs are available through banks and brokerages, with rates and terms varying by issuer.
4. Target date funds
Target date funds automatically adjust their investment mix based on a chosen year, often aligned with retirement. They typically start with a growth-oriented approach and become more conservative over time.
Advantages
● Built-in diversification
● Automatic rebalancing
● Simplified risk management
Drawbacks
● Limited customization
● Ongoing fees
● Asset mix may not match every investor’s risk tolerance
How to invest
These funds are commonly offered in workplace retirement plans and are also available through brokerage accounts.
5. Mutual funds and ETFs
Mutual funds and exchange-traded funds (ETFs) pool money from many investors to hold diversified portfolios. They can be actively managed or designed to track an index.
Advantages
● Professional management and diversification
● Long-term growth and income potential
● ETFs offer intraday liquidity
Drawbacks
● Market volatility can affect performance
● Expense ratios reduce net returns, especially for actively managed funds
How to invest
Both can be purchased through brokerage and tax-advantaged accounts. ETFs generally have no minimum investment, while mutual funds may.
6. Real estate
Real estate investing includes owning property for appreciation, rental income, or both.
Advantages
● Potential for long-term value growth
● Rental income opportunities
● Possible tax benefits, depending on structure
Drawbacks
● Illiquidity compared with stocks and bonds
● High upfront and ongoing costs
● Returns depend heavily on location and market conditions
How to invest
Options include direct property ownership, REITs, or real estate-focused funds.
7. Alternative investments
Alternatives go beyond traditional stocks and bonds and may include private equity, private credit, commodities, digital assets, and other specialized strategies.
Advantages
● Portfolio diversification
● Long-term appreciation potential
● Possible income generation
Drawbacks
● Limited liquidity
● Complex structures and higher fees
● Often restricted to qualified investors
How to invest
Access depends on the asset type. Some are available through brokerage accounts, while others require specific qualifications.
Strategies for long-term investors
Successful long-term investing is less about reacting to short-term market moves. It is more about following a disciplined strategy over time.
Approaches like steady investing, staying invested through market cycles, reinvesting income, and watching taxes can lower volatility. They can boost compounding and improve after-tax results. When these strategies are aligned with your goals and time horizon, they can provide a steady framework for building and preserving wealth over the long run.
Sources:
https://www.fidelity.com/learning-center/trading-investing/long-term-investments
Disclosure:
This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.
This material is provided as a courtesy and for educational purposes only.
These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.