At various times, many people may feel frustrated by the performance of their investments. For example, they expect growth, and they don’t get it — or they think the value of their investment won’t fluctuate much, but it does. However, some of this frustration might be alleviated if investors were more familiar with the nature of their investment vehicles. Specifically, it’s important to keep in mind the difference between long-term and short-term investments.
What defines long-term and short-term investments? Long-term investments is that real estate investment that you intend to hold for more than one year — in fact, you generally intend to hold them for several years. On the other hand, you usually hold short-term investments for one year or less.
Short-term investments can include a number of possible investments. Marketable investments are just one of the possible choices investors might make for short-term investments.
Short-term investments vary widely between different businesses. Big real estate investors have billions of naira in short-term investments that are managed by professional investment firms. For such corporations or persons, cash management is a very important part of their businesses and may represent a very sizable second stream of revenue for the companies. Small investors may only have a few millions of naira available for short-term investments, and the investments may well just be handled by the business owner or committed to a mutual fund.
For a real estate investment to be deemed as a short-term investment, it must have two specific qualities. The investment must have a degree of marketability that allows it to be turned into cash quickly. The company holding the portfolio must have the intent to turn the investment into cash within one operating cycle, or one year, depending upon which period of time is longer. Such short-term investments are classified as current assets. An active market should be available to guarantee liquidity for these investments. Short-term includes investments that possess a maturity less than 270 days. Because the market for these investments is so active, they are considered to be nearly as liquid as cash...