Short-term investments involve placing money for a maximum of 3 years - or even 1 year for certain products. They can be broken down into:
Low-risk investments, with relatively low yields, such as a government bond with a pre-determined maturity (usually over 3 years but sometimes shorter), issued by a reliable issuer, i.e. a government you can trust in terms of seriousness and reliability.
Investments that offer higher returns, but are also riskier, such as buying shares in a company with the intention of selling them within a short space of time. This type of short-term investment requires you to keep a close eye on market trends, so you need to devote some time to it, but you also need to have the necessary knowledge to be able to do so, and to accept the risks involved
Recommendation:
We strongly advise against investing for a period of less than 3 years, as the risk of fluctuations in the investment is too great and will therefore make it impossible to smooth out the return or achieve a potentially positive return.
As for long-term investments, they presume you leave your money to work for at least 10 years
The main characteristics of this type of investment are a potentially lower risk, not because the investments are less risky, but because their duration means that you can wait for favourable market cycles to maximise your profits (or limit your losses).
You should know that there are also medium-term investments (the majority of products), which lock in your money for periods of 3 to 10 years.
"}},{"componentType":"sectionTitle","title":"Main types of investment available in Belgium"},{"componentType":"paragraph","richBody":{"value":"Types of investment | Investment duration | Level of risk | Investor profile
| Return* |
Bonds | Short and medium term | low to medium | High-security investor | Potentially lower |
Equities | Medium to long term | Strong to very strong | High-risk investor | Potentially high yields |
Mutual funds | Medium to long term | Medium to high | Balanced to high security investor | Potentially medium to high |
ETF (trackers) | Medium to long term | Strong to very strong | High-risk investor | Potentially high |
*the notion of return is a subjective concept
The choice between short-term investing and long-term investing depends first and foremost on the investor's profile. For investors who prefer quick returns, have the necessary knowledge and are prepared to spend time monitoring the market, short-term investing may be an appropriate option. However, it should be borne in mind that this approach may involve a higher risk, depending on the nature of the investment.
On the other hand, for those who take a long-term view, are prepared to tolerate market fluctuations and are looking to build lasting wealth, long-term investing may prove to be a more profitable strategy. It is essential to understand that this approach requires considerable patience and tolerance to risk, and you must not be likely to need the funds invested in the short term.
"}},{"componentType":"sectionTitle","title":"Comparison between short-term saving and investing"},{"componentType":"paragraph","richBody":{"value":"Saving and investing in the short term are two distinct financial strategies, each with its own advantages and considerations.
Short-term saving, generally considered to be a safer approach, offers a guarantee of capital preservation. It is ideal for short-term goals with a low risk appetite. However, the real return is often much lower compared to investing, and may even be negative in the event of high inflation.
Short-term investing, on the other hand, can offer, as already mentioned, higher returns, but with a higher level of risk. Short-term investments such as bonds or mutual funds can be influenced by a variety of market factors and this can increase volatility. This approach is not recommended and, what's more, is reserved for insiders.
"}},{"componentType":"sectionTitle","title":"Comparison between long-term saving and investing"},{"componentType":"paragraph","richBody":{"value":"When it comes to long-term saving and investment, the difference lies mainly in the potential return and the level of risk.
Long-term savings are currently benefiting from higher interest rates, and this is encouraging savers to put more money aside. In addition, a long-term investor may be interested in having liquidity in long-term savings. Even if the potential return remains more than reasonable, its low level of risk is still attractive. By way of illustration, this corresponds to a term account.
Long-term investing can provide the opportunity for significant capital growth. Investments such as equities, long-term bonds or mutual funds have the potential to outperform inflation and generate a real return on capital. However, they are also subject to market volatility and require a tolerance for risk and the patience to wait for the right moment to maximise profits.
"}},{"componentType":"sectionTitle","title":"Advice on choosing between saving and investing"},{"componentType":"paragraph","richBody":{"value":"The choice between saving and investing depends on a number of factors, including your financial objectives, your risk tolerance and time horizon. If you are planning a major expense such as a property purchase in the near future, saving may be a more appropriate option.
"}},{"componentType":"sectionTitle","title":"Conclusion"},{"componentType":"paragraph","richBody":{"value":"It's important to remember that everyone has their own financial goals, and what's right for one person may not be right for another. That's why it's crucial to make an informed decision based on a thorough understanding of your own financial needs and objectives. But one thing is certain: it's still a good idea to combine savings AND investing for an optimal financial strategy! And remember that short-term investing is still not to be recommended! A word to the wise...
"}},{"componentType":"sectionTitle","title":"Also consider!"},{"componentType":"cards","cards":[{"componentType":"articleCard","cardType":"article","cardSize":"medium","title":"Finding investment decisions complex?","body":"Have a strategy to invest","image":{"transformBaseUrl":"https://assets.ing.com/transform/ac35847c-72d6-47a9-86e2-8de1aba65fa7/the-ing-investment-strategy-1920","type":"image","width":1920,"original":"https://assets.ing.com/m/6c905a2b6198b8ec/original/the-ing-investment-strategy-1920.jpg","extension":"jpg"},"date":"2022-06-23","link":{"url":"/en/individuals/investing/the-ing-investment-strategy"}},{"componentType":"articleCard","cardType":"article","cardSize":"medium","title":"Saving or investing?","body":"How to choose?","image":{"transformBaseUrl":"https://assets.ing.com/transform/e50295fc-9f70-433e-8e27-24019329946b/investments-basics-video-investing-or-saving-1920","type":"image","width":1920,"original":"https://assets.ing.com/m/5a50dd8ebbb34ff3/original/investments-basics-video-investing-or-saving-1920.jpg","extension":"jpg"},"date":"2023-01-26","link":{"url":"/en/individuals/managing-my-assets/investment-academy/saving-and-investing-basic-concepts"}},{"componentType":"articleCard","cardType":"article","cardSize":"medium","title":"Investing: get off to a flying start with these 5 tips","body":"Basic principles","image":{"transformBaseUrl":"https://assets.ing.com/transform/12167210-906f-4383-989b-6541a7c55c93/start-to-invest-tips-1920","type":"image","width":1920,"original":"https://assets.ing.com/m/625a3702e03206/original/start-to-invest-tips-1920.jpg","extension":"jpg"},"date":"2020-09-20","link":{"url":"/en/individuals/managing-my-assets/investment-academy/start-to-invest-tips"}},{"componentType":"articleCard","cardType":"article","cardSize":"medium","title":"5 myths about investing","body":"We're debunking them for you","image":{"transformBaseUrl":"https://assets.ing.com/transform/e649c5d5-6e70-4b29-add0-f590045365ea/five-myths-1920","type":"image","width":1920,"original":"https://assets.ing.com/m/179791f44c6ebda6/original/five-myths-1920.jpg","extension":"jpg"},"date":"2023-03-09","link":{"url":"/en/individuals/managing-my-assets/investment-academy/5-myths-investment"}}]}]}}}