Time is one of the most important factors when investing, as this influences the results of the investment. There are three investment horizons: short, medium and long term. Here we will tell you what each of these horizons is about.
Considered the fastest of all, investing in the short term means investing in a period of time from one hour to one week. There are even very short time horizons which operate below one hour, for example, in 15 minutes or less.
More than an investment, This trading offers a great advantage which is the option of obtaining high returns in a short time. Most of Forex assets such as currencies, as well as some cryptocurrencies allow trading under this modality, as well as CFDs are the most common mechanism for the short term.
Among the disadvantages we find the high volatility of the markets, especially in cryptocurrencies. The operating costs are usually much higher, as well as the commissions charged by the broker. Lastly, this requires much more attention, as the stress of making quick decisions is very high.
Medium-term investments contemplate a period of one week to several months so they can already be considered as investments really. This gives us a great advantage to be able to carry out a much deeper technical analysis to make better decisions when investing.
Among the advantages that investment offers in the medium term is being able to determine the potential changes in prices and value. We will have a greater breadth in terms of investment instruments. In addition, the stress will be much less, since we will not have to spend all day in front of the computer.
We must also take into account the negative aspect, having as the main disadvantage that aqui it is necessary to have more knowledge of finance by requiring a deeper analysis. In the same way, here the external situation such as the general instability of the markets, can influence your investments and their behavior.
This type of investment is the one with the longest term, since it can range from a few months to years, depending on the instrument. Its value tends to grow slowly but constantly, while the risk of losses due to volatility is usually much lower than in other assets and in other periods of time.
The advantages offered by long-term investment are many, such as the fact that you will have more free time to operate. You should not be supervising your investments and the operating costs are low. What's more, You can get very good returns if you invest large sums over long periods of time.
We recommend considering some of its disadvantages such as the fact that it is necessary to have a good amount of money to generate great returns. You should not require immediate profits, as well as you will have to carry out much more in-depth and detailed analysis to know what to invest in and for what term.