Investing refers to the act of spending money or using other resources to acquire assets with the expectation of receiving a profit from them. A long-term investor is an individual who makes such expenditure without immediately seeking her return. She may make her decisions alone or she may employ the assistance of an investment professional. There is not a set amount of time that assets must be left for a person to be considered a long-term investor. In many instances, however, any period of less than a year is considered short-term investing.
There are many types of assets that investors can acquire. These include stocks, certificates of deposit (CDs), and real estate. The items that a person invests in do not generally determine whether or not she is a long-term investor. This is determined instead by the amount of time she allows her investments to grow.
Since assets will remain invested for an extended period, a long-term investor generally does not panic or act based on short-term results. The fact that a person is a long-term investor does not prohibit her from doing so, however. A person is not required to leave her resources tied up in any single asset.
Good long-term investors are observant and strategic. If a particular asset does not appear to be worthy, it can be replaced with another option. Even if this is done in a short period of time after it is acquired, a person does not become a short-term investor.
For example, Lisa may purchase stocks in Black Metals on the 2nd of January. By the 2nd of March, she may realize that Black Metals is in financial trouble and the stock is not likely to offer the return she is hoping for. She may sell the stock and purchase other stock, which she may keep for an extended period or which she may also sell. As long as Lisa does not remove the money from her investment portfolio, she can move it around and still be considered a long-term investor.
For some people, long-term investing is simply a strategy. They tend to believe that it is better to hold on to assets for an extended period of time than it is to chase short-term profits. For other people, leaving their assets in their investment portfolios for long periods is a means to help them achieve their long-term goals. For example, a person may purchase a 30-year bond with the anticipation of reaping the profits after retirement.
