Finder makes money from featured partners, but editorial opinions are our own. Advertiser disclosure

Long term investments

Find out how long term investments work and how to use long term investments to build your wealth.

The length of time you hold on to an investment can impact your portfolio. Even small long term investments can grow into a healthy-sized portfolio over time. Here’s how to use long term investments to optimize your financial growth.

Best for beginners

Go to site
Get up to $1,000 in stock
  • No-cost financial planning and automated investing
  • Trade stocks, options, ETFs, mutual funds, alternative asset funds
  • $0 commission on stocks, ETFs and options, with no options contract fees

Top pick for advanced traders

Go to site
Get up to $5,000 cash
  • Trade options, futures, options on futures, stocks, ETFs
  • $0 commission to close options
  • Pro-grade platform and risk analysis tools

Best for mobile experience

Go to site
3% IRA match with Robinhood Gold
  • Earn 5% interest on uninvested cash with Gold
  • Get up to $50,000 in instant deposits with Gold
  • Easy, user-friendly trading

What is a long term investment?

There’s no official definition of a long term investment. However, most experts usually view an investment as “long term” when you intend to keep it for 5 years or more.
Short term investors, who tend to sell their investments in less than 5 years, can’t afford to invest their money in higher-risk investments. They may have to sell their investment when the market has slumped and end up suffering a loss.
In contrast, long term investors can afford to make somewhat risky investments, knowing that they can reap rewards over a long period of time. For them, long term growth is more important than shorter term slumps.

Different types of long term investments

  • Savings accounts. These accounts are unlikely to keep pace with inflation due to historically low rates of return.
  • Stocks. Stocks let you own a small This is where you own a small part of a company. Many larger companies pay dividends to shareholders so you could earn income as well as.
  • Equity funds. These funds invest in a wide range of stocks, giving you diverse exposure to the market.
  • Index funds. This is a type of equity fund that invests in all the stocks included in a particular index like the S&P 500.
  • Bonds. These are sold by governments or corporations and are generally lower risk than stocks and funds.
  • Property funds. These funds invest in real estate or in shares of property companies.
  • Commodities funds. These funds invest in raw materials like gold, silver, precious metals and energy. It’s also possible to buy a fund that invests in companies that mine precious materials or energy resources.
  • Investment property. Some long term investors choose to buy a property to rent out and earn income.

Can I make money with long term investments?

Long term investments can make more money than short term investments. This is for several reasons:

  • Long term investors can often afford to pick higher risk investments, because they won’t need the money for a while. On average, high risk investments tend to grow more than low risk investments.
  • Long term investors will be less affected by a stock market crash and can afford to wait until the market bounces back. Short term investors may need to access their investment right when the market has plunged.
  • Long term investors can benefit from dollar cost averaging, a strategy where you invest gradually over time rather than all at once. Dollar cost averaging often leads to bigger returns in the long run as you are averaging out the purchase price of your investment. If you invest in one go you are likely to miss buying opportunities when the price of an investment has dropped.
  • Long term investors have time to benefit from compounding, which is when your investment wealth snowballs over time. For example, if you invest $10,000 when you’re 20 and it grows at a rate of 5% annually (assuming interest compounds monthly), it’ll be worth $16,470 after 10 years, $27,126 after 20 years, $44,677 after 30 years and $73,584 after 40 years.

Should I choose high or low risk long term investments?

It’s a good idea to get independent financial advice when you’re setting up an investment portfolio. A financial advisor will take into account your personal circumstances and your risk tolerance before suggesting suitable investments.
In general, if you’re a long term investor then you may want to consider investing in some medium to high risk investments as part of your portfolio. That’s because you don’t need the money for a while so you have time to wait for the stock market or another investment to bounce back from a slump.

What are some strategies or options for long term investing

The strategies for long term investing depend on your financial circumstances and your attitude towards risk. Here are some popular strategies for long term investing:

  • Passive investing. This focuses on investing in low cost, index-tracking funds.
  • Growth investing. This approach focuses on businesses that are expected to grow quickly in the future. These companies might not yet be profitable or might only have small profits, but there is the potential to increase sales and enjoy high stock price growth.
  • Value investing. This focuses on investing in companies that may be undervalued based on financials and future potential.
  • Dividend investing. This approach prioritizes owning stocks that pay regular cash dividends, which can generate income and boost your portfolio if you reinvest the dividend income into more stocks.

Many long term investors opt for a mixture of strategies, combining passive investing with stocks geared towards growth, value and dividend investing.

Where can I find help with long term investments?

If you want help with finding long term investments then you can ask for advice from an independent financial advisor. They will review your financial circumstances and your attitude to risk before advising you on potential investments.

Where can I find long term investments?

There are many different options for long term investors. Here are some popular ways to invest:

  • Join a workplace pension plan and make contributions. Most providers offer a choice of investment funds, so you can pick those suited for long term investments.
  • Open an IRA. Make tax-deductible contributions, and pay income tax when you make withdrawals later in life.
  • Open an investment account with an online investment platform. Many trading platforms offer portfolios of stocks as well as the opportunity to invest in individual stocks.

Pros and cons of long term investing


  • Benefit from compounding, which can grow your money significantly over time.
  • Benefit from dollar cost averaging, which involves investing gradually over many years. This reduces your risk that you’ll buy when the market is high and lose money on your investment.
  • Can pick higher risk investments, because you’ll have the time to bounce back from slumps in value.


  • Not suitable if you need to access your investment within 5 years.
  • May lose value in the short term. Investments like stocks fluctuate significantly in value, so you risk losing money in the short run compared to keeping money in a savings account.

Open an investment account

1 - 6 of 6
Name Product Available asset types Annual fee Signup bonus
SoFi Invest®
Finder Score: 4.2 / 5: ★★★★★
SoFi Invest®
Stocks, Mutual funds, ETFs, Alternatives
Get up to $1,000 in stock
Commission-free stocks, ETFs and options, with no options per-contract fees. Plus, a no-cost robo-advisor and complimentary access to certified financial planners (CFPs).
Finder Score: 4.4 / 5: ★★★★★
Stocks, Options, ETFs, Cryptocurrency, Futures, Treasury Bills
Get $50-$5,000
Competitive, capped options commissions, with a reliable trading platform designed for serious traders.
Finder Score: 4.4 / 5: ★★★★★
Stocks, Options, ETFs, Cryptocurrency
Get a free stock
Trade stocks, options, ETFs and crypto without commissions and on a user-friendly platform. Plus, a 1% IRA match and no options contract fees.
Finder Score: 4.2 / 5: ★★★★★
Stocks, Bonds, Options, ETFs, Cryptocurrency, Alternatives, Treasury Bills, High-yield cash account
Get up to $10,000 and transfer fees covered
Build a diversified portfolio of stocks, bonds, options, ETFs, crypto and alternative assets, with a high-yield cash account and options contract rebates.
Finder Score: 4.7 / 5: ★★★★★
Stocks, Options, ETFs
Choose a 1.5% match or up to 15 free fractional shares
No commission stock, ETF and options trades, with $0 equity options contract fees, low margin rates and advanced trading tools.
E*TRADE from Morgan Stanley
Finder Score: 4.2 / 5: ★★★★★
E*TRADE from Morgan Stanley
Stocks, Bonds, Options, Mutual funds, ETFs, CDs, Futures
$0 per year
Get up to $1,000
terms apply
$0 commissions on US-listed stocks, ETFs, mutual funds and options, with powerful, easy-to-use tools and complimentary market research.

Paid non-client promotion. Finder does not invest money with providers on this page. If a brand is a referral partner, we're paid when you click or tap through to, open an account with or provide your contact information to the provider. Partnerships are not a recommendation for you to invest with any one company. Learn more about how we make money.

Finder is not an advisor or brokerage service. Information on this page is for educational purposes only and not a recommendation to invest with any one company, trade specific stocks or fund specific investments. All editorial opinions are our own.

Bottom line

Investing as early as possible and holding on to your investments gives your money lots of time to grow in value. It also lets you pick slightly higher risk investments, which often grow over time. Speak to an independent financial advisor if you’re not sure whether long term investing is right for you.
Investing for the future

Frequently asked questions

More on investing

Written by

Alice Guy

Alice Guy is a Suffolk-based finance writer, a busy mum of 4 older kids and a self-confessed personal finance geek. She trained as a chartered accountant with KPMG London before working for Tesco Plc as a business analyst. She loves to write about budgeting, saving, investing and building wealth. See full profile

More guides on Finder

Ask a Question provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Go to site