Article | 2:29 min read

How To Navigate Your Short Versus Long-Term Investment Goals


Many of us share similar investment goals, including having enough money for retirement, paying for college, or putting a down payment on a house. Learn how you can navigate your short and long-term investment goals.

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During times of market instability and financial uncertainty, it can be common to lose sight of your long-term investment goals in order to accommodate for the here and now. However, while you might feel the need to act now, it is important to understand the importance of both short-term and long-term goals and how each can affect your financial plan.

Short-term investments typically involve less risk and more liquidity, meaning you have better (and quicker) access to the funds. Examples of short-term investments include money market accounts, higher interest savings accounts, and certificates of deposits (CDs). Short-term investments can be managed on your own and have flexibility when it comes to withdrawing your funds.

Long-term investments sometimes have less liquidity, meaning you may have limits on accessing the funds. Examples of long-term investments include an IRA, 401K, or the stock market. Long-term investments are often managed by financial professionals and the value of the investment is often tied to the economy or other uncontrollable factors. Due to the longevity of a long-term investment, the funds have a better chance of bouncing back, if losses are incurred over time. Keep in mind not all investments are FDIC insured.

Your financial goals will determine which investment option is the best solution for you, although it can be beneficial to have both short and long-investment options. For example, you will need quick access and flexibility with your emergency funds. So while it makes sense to have those funds earning interest in a money market or interest-bearing savings accounts, it is important that you can access them in a hurry if an emergency arises. If you are saving for a future home, it might make sense to invest your current savings amount into a certificate of deposit to earn a higher interest than it may earn in a typical savings account.

If you are planning long-term, using retirement as an example, an individual retirement account (IRA) could be the best option. IRAs are retirement savings solutions with immediate tax benefits and flexible access to your funds. You also have options such as a Health Savings Account (HSA) that provide both short-term and long-term benefits. In the short-term, an HSA paired with a high-deductible health plan can be a great savings tool for qualifying health care expenses. When your HSA reaches a certain balance, those saved funds can be invested and utilized as a retirement savings tool.

If you are looking to invest your savings or extra funds in the stock market or a guaranteed income stream such as an annuity, it can be helpful to talk with a financial advisor to determine the best strategy to meet your long-term investment goals. If you are new to investments or would like to grow your portfolio, a financial advisor can evaluate your financial plan and help you determine your next steps for financial growth and stability.

The first step is to identify your financial goals. Download our Financial Goals Worksheet today to get started.

The information provided in these articles is intended for informational purposes only. It is not to be construed as the opinion of Central Bancompany, Inc., and/or its subsidiaries and does not imply endorsement or support of any of the mentioned information, products, services, or providers. All information presented is without any representation, guaranty, or warranty regarding the accuracy, relevance, or completeness of the information.