When entering the world of investing, you'll soon discover the two main approaches: short term and long term. In theory, the instant profits short term investments can provide often appeal to the average retail investor more than their long term counterparts — but for a trader seeking a strong financial future, this might be misleading.
Although investing money in the short term may offer the allure of quick profits, people can easily forget the extra risks and volatility that comes with it. Long-term investments, on the other hand, have far higher potential for stable growth and retirement savings.
Whether it's to supplement your workplace pension, savings account, or just simply adding to your investment portfolio, long term investing shouldn't go under your radar.
Throughout this article, we'll be exploring our favourite long term investments to consider for 2024. From stocks and shares to crypto and everything in between, our list reflects all the choices you need to keep a diversified portfolio.
Real Estate
Kicking things off, let’s begin with real estate.
Unlike stocks or any other investment vehicles with an air of unpredictability, real estate investments can generally stay fairly stable during market volatility.
Let’s take a closer look at why you might start investing in real estate.
Steady Cash Flow
In terms of receiving a passive stream income with relatively little maintenance, few options can outperform the cash flow of rental income. These properties give investors consistent monthly income, meaning it’ll fit nicely among the more proactive parts of your business portfolio.
Appreciation
Compared to some of the more common investment options out there, real estate has a unique tangible aspect to it with a great opportunity to appreciate over time. In combination with any money earned through rental income, this appreciation can provide a significant return on investment.
Tax Advantages
When looking at the tax benefits of real estate, the list is healthy:
- Deductions for mortgage interest
- Property taxes
- Depreciation
Having something in your investment portfolio that can mitigate your overall tax liability is conducive to a strong cash flow, especially given the capital gains tax from other investments.
Different Types of Real Estate Investments
When looking to get some exposure in the real estate market, there's a few ways you can achieve it, each with their own benefits and risks.
Let’s briefly go over the different angles you can approach this kind of investment:
Rental Properties
Owning your own rental property in a lucrative location and renting it out to tenants is not only one of the most popular methods, but also perhaps the most effective.
You’ll have to consider a litany of factors when deliberating your options, but having the ability to set your property up for low maintenance and receive monthly payments cannot go amiss.
Commercial Real Estate
Commercial real estate works slightly different from your typical rental property, but remains highly profitable if completed correctly. Typically, this type of real estate pertains to office buildings or retail spaces.
Although they have the potential for higher returns than residential properties, this investment is far higher maintenance — not to mention the substantial upfront investment.
Industrial Real Estate
This kind of investment works on a much larger scale than the previous two options, so it’s mostly only accessible to those with a lot of capital to throw at it. Industrial real estate are properties like factories and warehouses, so expansive buildings that take up a lot of space.
Though these properties can provide a significant return on investment for those with the funds to manage it, they’ll notice the many complications that can arise when unfamiliar with the industry you’re facilitating.
For instance, say you’ve bought a factory that produces car parts and an expensive, scarcely sourced machine malfunctions or otherwise needs attention. Without a pre-existing understanding of that business sector, you’ll find it incredibly difficult to navigate and ultimately repair — as well as being currently unable to generate revenue.
REITs
Real Estate Investment Trusts (REITs) make investing in this market a much more spoon-fed process than handling it yourself. Essentially, these are companies that own and manage a portfolio of highly curated real estate properties that aim to grow in value.
These types of investments can be excellent for adding extra diversification to your investment portfolio, especially since you’re able to tap into the multiple different scales of real estate investments we’ve covered earlier all at once.
However, it’s worth mentioning that in comparison to owning and managing your own property, the potential profits pale in comparison. Still, it’s nice to be able to take a back seat approach when investing sometimes, so these are definitely still worth considering.
While we aren't clairvoyant and able to definitely predict which types of investment will boom the most, we’ve put together a list of educated predictions:
Industrial Properties
As mentioned, these are properties mostly known for manufacturing, distribution, or storage. So, why might these be particularly useful for 2024? There’s a few reasons, but their growing demand can largely be chalked up to the rise of e-commerce and their distribution centres.
Online shopping is only becoming more mainstream, and this in consumer behaviour is reflected by the number of retailers shifting to e-commerce models. As such, this means industrial properties have serious potential for growth, and their demand is only increasing.
Senior Housing
Next up, we have senior housing; houses designed to accommodate elderly people. This may seem like a slightly left field bracket of residential property to hone in on, but there’s an explanation.
If we take a look at age demographics for the United Kingdom, it’s clear that we’re shifting to an ageing population. For investors, this means taking advantage of an increasing demand for things like senior living communities and nursing care homes.
When presented with the data, there’s a clear opportunity to take advantage of, so don’t underestimate this area as a long term option.
Short-Term Rentals
Lastly, short-term rentals, like holiday homes, are a popular choice for travellers who prefer to stay in homes rather than hotels. Fuelled by the growth of the sharing economy and desire for a more personalised travel experience, these properties have been growing in popularity over recent years.
In addition, the rising cost of living within the United Kingdom has taken a serious toll on everyone’s finances, making it a lot more expensive to go abroad for a holiday. With the growth of staycations, holiday homes in popular tourist destinations can be a great opportunity for solid returns.
Retirement Investing
While it may seem far away, any long term investment strategy without a retirement plan is incomplete.
Though we typically think of long term investments as anything over a few years, retirement investing aims to ensure financial security way further into your life.
Why Are Long Term Investments Important for Retirement?
Delaying planning for your retirement opens up a host of problems, not least its impact on your other investments. Without a strategy that clearly defines how you can live comfortably 20+ years down the line, there’s a high chance you’ll not have the funds to sustain yourself.
In the worst case scenario, your retirement could be postponed or you might even have to rely on government support. Obviously this is a major issue to tackle in any financial plan, which only further demonstrates the need for a long term retirement strategy.
Although you might be able to mitigate this with the profits of any other investments, it means you're only compensating for bad planning, and not maximising the hard earned gains you've worked for quite how you would've imagined.
By putting in the work early, you’ve got a much better chance of increasing your profits due to the added time you’ve given for your investments to grow.
Also, these investments don't need to take up a significant portion of your portfolio; even the smallest contributions made consistently over a long period can give you a healthy retirement fund. This is mainly thanks to the power of compounding interest — the investment strategy in which you reinvest all of your earnings, leading to even more growth.
Exploring Your Options
Now that we've stressed the necessity of a retirement plan, let’s explore some solid long term investment options.
Notice Savings Accounts
For the investors that prefer taking a more cautionary approach to trading rather than aiming for the moon, a notice savings account can be an excellent tool.
These kinds of savings accounts will typically offer better interest rates than the standard counterparts, but you’ll need to require the provider with some kind of notice before you’re able to withdraw the funds.
Although this makes them a solid choice for people that don’t mind the lack of immediate access, it’s still worth noting that these notice periods can vary. You might be comfortable with storing your savings for a year, but some of these accounts require much longer notice periods.
Should you choose to invest in a notice savings account, it’s critical you’re only contributing an amount of capital you can afford to be without in order to avoid any unwanted stress in your financial life.
High Yield Savings Account
If you're not a fan of the previous option, high yield savings accounts offer similarly high returns all while maintaining access to your funds. Still, some of these accounts work similarly to the prior option and will require a fixed rate commitment if you're looking to get the highest possible returns.
Though this might not be as flexible an option as something like stocks, they’re still a solid choice for any investor seeking higher returns without sacrificing accessibility.
Stocks & Bonds
Lastly, we have stocks and bonds (such as government bonds and corporate bonds). When it comes to retirement investing, you’d normally expect to be taking a slower, less hands-off approach. While stocks can still provide this by delegating your investing to a mutual fund manager, the stock market is a much more proactive means of retirement investing.
Having said that, putting in that extra bit of work in order to achieve long term financial security is certainly worth it. The stock market has huge potential to provide gains over the long term, with many of the greatest ever investors being long term holders of their shares.
As touched on, mutual funds are a way of getting exposure to the stock market without needing to do all the work yourself — how a long term retirement plan should be. These funds work with the guidance of a fund manager, someone who pools the capital of multiple traders to buy a diversified portfolio of stocks and bonds.
Alternative Investments
When it comes to investing for the long-term, most people immediately go to the classics, i.e. stocks, bonds, and so forth.
However, have you ever considered adding a slightly less typical investment to your portfolio?
‘Alternative investment’ is obviously a very broad term, with a spectrum ranging from precious metals all the way to trading cards. Still, we’ve compiled a few popular options that might be particularly effective for 2024 and the long run in general.
Let’s explore a few pros and cons of taking a less mainstream approach with your investment style:
Pros
One of the more attractive features of these investments is its potential for diversification. The average investor has a portfolio stocked with all the usual suspects — stocks, investment funds, CFDs, etc.
However, what happens when economic turmoil takes its toll on your mainstream investments? By adding a few alternative options to your portfolio, you’ll do wonders for your portfolio’s risk management.
What's more, these investments have the potential to generate even higher returns than any money invested in the stock market, though it may come with slightly more risk of losing money.
Cons
While there's plenty of reasons why alternative investments might turn heads, unfortunately there are still a few drawbacks that are necessary to consider. Take, for example, the lack of liquidity with these investments.
While you'll never have any major issues trading stocks on an online platform, some of the more niche investments can be slightly challenging to offload, meaning you may require a longer holding period to realise any of your gains.
Furthermore, it’s all well and exciting to consider getting into the collectible trading card market, but do you actually know anything about it? What makes one trading card more valuable than the next? Scarcity of supply? Original pressings? Do you know which cards the community considers grails?
There’s a litany of variables you’ll need to keep on top of when entering the less mainstream trading markets, and learning how to effectively navigate them can require more research than you might initially assume.
Best Alternative Investment Options for 2024
So, what are some specific alternative investments that look primed to take off this year? Let’s take a look. We’ve already covered real estate investment opportunities in detail, so we’ll be covering more traditional and unique options instead.
Precious Metals
While these investments are less niche than some of the other alternative options, there’s no denying the value of precious metals as a long term investment. Assets like gold and silver have been traded since the dawn of man, and their past record of retaining their value over time is nothing to be sneered at, despite the relatively low returns on investment.
Unlike most other assets on the stock market that have a tendency to be influenced by the state of current affairs, history will tell us that precious metals can hold their own weight – refusing to be destabilised during times of inflation or market turmoil.
Why does this matter for 2024 specifically? Well, as global economics remains somewhat uncertain, there’s a good chance that investors might flock to precious metals as a safe-haven investment, as evident throughout history.
Naturally, this makes the gold or silver market an excellent choice if you’re looking for a store of value with a predictable trajectory.
Collectibles
Moving on, let’s take a look at a more entertaining option, collectibles. Clearly, this is a very broad term, but valuable collectibles usually pertain to things like rare coins, artwork, vintage cars, etc.
Now, the reason that these items are able to preserve their value is often based on scarcity and demand, which means that certain items can increase in value significantly over time.
As an example, let’s look at rare stamps. Philately, (the collection of stamps), has been gaining traction on search engines over the last 5 years, with a notable spike during the lockdowns in 2020. As more and more stamps are released every year, the value of old, pre King Charles stamps are only going to increase.
However, as with precious metals and trading cards, investing in collectibles requires a significant amount of research and expertise, as well as a willingness to hold onto the asset for an extended period.
Cryptocurrency
Digital currencies have been all the rave for a good few years now, and it's not without reason.
It's a new, innovative technology that undoubtedly has the potential to change the world — but is it worth investing for the long haul?
In this part of the article, we’ll be taking a closer look at what makes crypto such a unique option for a long term investment strategy, as well as any of the potential pitfalls. We’ll also be rounding things off with a few popular selections to consider when entering the crypto world, and if these coins have any merit when it comes to long term investments
Benefits
Return On Investment ✔️
It goes without saying that a big chunk of cryptocurrency’s allure is the one potential for high returns. After all, if you can make yourself a fortune by investing in crypto, you’ll need to worry slightly less about an extensive retirement plan.
Let’s take Bitcoin and Ethereum for instance. These two coins have experienced substantial growth in value since their inception, and firm believers in the technology have no doubts in their expected trend to continue in the future.
Decentralisation ✔️
Part of the reason behind the massive success of these coins lies in one of cryptocurrency’s fundamental tenets — decentralisation. Essentially, this is just a fancy way of saying the currency isn’t controlled by any one central authority, they’re controlled by the people.
In addition, this unique aspect of crypto makes it a lot easier to avoid major market fluctuations and economic instability, making them a great means of diversification. As cryptocurrency is a global market, it’s not intrinsically linked to the wider stock market, meaning it still has the potential to perform while traditional stocks look more bearish.
Innovative Technology ✔️
Lastly, another reason you may invest money in crypto is because you're entering a cutting edge market on the ground floor. The entire notion of a digital currency is still a relatively novel concept, and the technology is definitely still in its infancy on the wider scheme of its potential.
As such, this means there’s huge opportunities for further growth and innovation, and the value of cryptocurrencies will only continue to rise as they become more advanced and widely adopted.
Drawbacks
Volatility ❌️
Unfortunately, as with all investments, we eventually have to talk about the drawbacks, namely cryptocurrency’s volatility. Digital coins are notorious for their wild price swings, with black swan events happening in this industry more often than any others. Naturally, this makes them a very risky proposition for the more conservative investors not looking to lose money.
The value of a cryptocurrency can fluctuate by as much as 25% in just a day, so despite how promising the technology is, it's incredibly difficult to accurately predict their long-term value. Ultimately, crypto is a high-risk, high-reward proposition — and not for the faint of heart.
Lack Of Regulation ❌️
One of the oldest and most valid concerns of the entire cryptocurrency space is its lack of regulation. While most traditional investments are overseen by a central authority to ensure they abide by the rules, crypto has no such counterpart due to its decentralisation.
As a result, this makes the average investor far more susceptible to fraud or any other kinds of scam, and pump-and-dump stories are far too common.
Novelty ❌️
Lastly, although we used it as an example to highlight its potential, it’s worth mentioning the uncertainty surrounding any new popular investment vehicle. Although we’ve been hearing about it more than ever before, cryptocurrency is still incredibly novel, and it’s challenging to predict what evolutions it’ll undertake or how much it’ll impact the world in the long run.
Ultimately, the success of cryptocurrencies is largely dependent on their adoption and usage, and there is no guarantee that they will ever become widely accepted across the world.
Exploring Popular Coins
If you’re still a firm supporter of cryptocurrency’s long term use cases, you’ll need to start considering which coins you want to invest in.
There’s thousands of options which makes picking the next 100x coin near impossible, so we’ve just compiled the coins with the highest chances of long term success.
Bitcoin
As the biggest and most well-known cryptocurrency, Bitcoin will undoubtedly make the recovery necessary to remain a significant player in the financial markets. This coin has a vast community of owners and supporters, with bulls across the world refusing to give up on their beloved cryptocurrency.
Ethereum
At number two, we have Ethereum. In relation to market cap, Ether is the second largest coin behind bitcoin, and has a range of attractive features that make it unique. Starting with their robust team of developers, Ethereum is always striving to find new and innovative applications for their coin.
Their platform also utilises smart contracts, which are a self-executing contract with the rules of the agreement directly written into code. This lets the wider crypto community create decentralised applications, something that can be utilised in various different industries.
Cardano
Cardano is nowhere near as reliable or popular as the prior options, but this crypto still has massive potential for long term success. Similarly to Ethereum, Cardano has an active team of developers that frequently interact with their growing community of supporters, only boding well for their future prospects.
The Importance of Thorough Research
Although we’ve already touched on the risks of investing In cryptocurrency, it’s worth reiterating the importance of research. Being as new and unregulated as they are, there’s an unpredictability with crypto unlike any other investment options, so it’s paramount that you have a firm understanding of the technology and all the risks involved before investing.
In addition, always try to consider the track record of your potential investment and how transparent their development team is. Whether it’s looking at the high time frame charts or getting involved in the telegram groups, make sure your investments are never made blindly.
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