Long-term investments can be the key to safely growing your money

21 February 2025

Do you want your invested money to bring stable profits? Long-term approaches to investing offer a path to financial independence. But how do you choose the right strategy? Discover the options that can help you grow your capital wisely and secure a better future. We will also show how the InvestBay platform can help in this respect.

What is a long-term investment and why is it worthwhile?

A long-term investment means putting capital into assets that have the potential to grow over a horizon of several years up to a few decades. Typically these are stocks, real estate, bonds or funds that appreciate gradually.

Compared with short-term investments, they have one huge advantage – they reduce the risk of asset price fluctuations. The longer you let your money work, the higher the probability that your investments will grow.

If we look, for example, at the historical development of the S&P 500 index, we won't find a period longer than a few years in which the total return was negative. Even though markets fall in the short term, a long-term horizon makes it possible to "smooth out" these fluctuations. Investors who stay in the market longer have a substantially higher probability of achieving a positive return.

Why does it work?

The market grows over the long term – Economies develop, companies innovate and create value. Although crises come along, the long-term trend is clearly upward.
Lower probability of loss – Short-term declines, even though they can be dramatic, even out over time.
The power of compound interest – The longer you invest, the more your returns appreciate further, which maximises the overall result.

A long-term investment is therefore not about whether the market falls in the short term, but about the fact that it grows over the long term. If you invest for 10+ years, you increase the probability that your capital will not only weather crises but also appreciate significantly above inflation.

What is the ideal investment horizon?

There is no universally ideal investment horizon, because the right one for you will depend on several factors. Your investment goals, risk tolerance and the liquidity of the assets will significantly influence what is ideal for you specifically. In general, the investment horizon can be divided into three main categories:

Short-term investment horizon (up to 3 years): Suitable for investors who will soon need their funds. Low-risk investments such as savings accounts, term deposits, short-term government bonds or money market funds. Low volatility, but also lower returns.
Medium-term investment horizon (3–10 years): Suitable for investors who plan to grow capital for larger purchases, such as buying a house or their children's education. A balanced portfolio, for example a combination of bonds, equity funds and real estate investments. Returns tend to be higher than with short-term investments, but still with lower risk than long-term strategies.
Long-term investment horizon (10 years and more): Ideal for building wealth and preparing for retirement. Stocks, real estate, index funds, ETFs or investments in alternative assets are suitable. Higher returns with acceptance of higher volatility in the short term.

In the context of the real estate investments that InvestBay offers, the investment horizon often ranges between 5 and 10 years, which corresponds to a long-term strategy of growing assets and increasing the value of the property. Investing in crowd-owning is tailored to investors looking for stable rental income and a later profit from selling the property, which requires patience and a more long-term commitment.

What are the options for long-term investments?

Stocks and ETF funds

Investing in stocks is among the most profitable ways to grow capital, because over the long term they outperform inflation as well as other investment instruments. However, directly buying shares of companies requires knowledge of the market, analysis of corporate results and tracking economic trends.

Successful investors often focus on so-called blue-chip stocks (stable, established companies), growth stocks or dividend stocks that pay out a share of the profit.

An alternative is ETF funds (Exchange Traded Funds), which track the performance of a particular market or sector and offer diversification without the need for active portfolio management. For example, the widely tracked S&P 500 index has historically delivered an average annual return of around 7–10 % after adjusting for inflation. The advantage of ETFs is the low management fee, easy accessibility and the option to invest even smaller amounts.

Bonds

If you are looking for a more stable investment that fluctuates less, bonds can be an interesting choice. Government bonds are generally safer than corporate bonds, but they carry lower returns. For example, US government bonds (US Treasuries) are considered the safest investment in the world, while Czech government bonds can be an interesting choice for conservative investors who do not want to take on currency risk.

Corporate bonds offer higher returns, but their riskiness depends on the financial condition of the given company. High-yield bonds can be attractive, but they also carry a higher probability of issuer default. For greater safety, investors often choose diversified bond funds, which spread the risk across multiple issuers.

Real estate investments with InvestBay

One of the most stable and most popular forms of long-term investing is real estate. However, the classic purchase of an investment flat requires a lot of capital, administration and worries with tenants. In addition, you need to factor in maintenance costs, taxes and legislative restrictions (e.g. the regulation of short-term rentals in some cities).

Thanks to the InvestBay platform, however, you can invest in real estate from as little as CZK 2,500 and obtain a share of the income from rentals as well as from the sale. Crowd-owning allows investors to own a property together, share the returns and at the same time avoid the worries of managing it. InvestBay selects attractive locations that have the potential for value growth and stable income. An advantage of this form of investing is also the lower entry barrier and the smaller risk of concentrating capital in a single property.

Mutual funds

Mutual funds are suitable for investors who do not want to actively manage the selection of stocks or bonds. They offer professional management, broad diversification and access to various markets. There are different types of funds:

Equity funds – focused on growth investments with higher risk and return.
Bond funds – more stable, suitable for conservative investors.
Mixed funds – a combination of stocks, bonds and other assets, offering a balanced ratio of risk and return.
Index funds – they track the development of the market (e.g. S&P 500) and tend to have lower fees than actively managed funds.

The advantage of mutual funds is automatic diversification and access to active management, but a disadvantage can be the higher management fees of some actively managed funds.

Long-term saving and supplementary pension schemes

If you are looking for a safe path to saving, pension funds and building savings can be an interesting choice. The returns are not high, but the state often adds tax breaks and contributions to them, which significantly increases their attractiveness.

Supplementary pension saving: The state contributes to regular deposits and allows tax advantages on higher contributions. Pension funds are stable over the long term, but their returns often barely cover inflation.
Building savings: It combines a savings component with the option of a favourable loan. Thanks to state support and guaranteed interest, it is a safe option, but in terms of profitability it usually does not beat inflation.

Both options are suitable for conservative investors or as part of a diversified portfolio.

Cryptocurrencies

Cryptocurrencies such as Bitcoin or Ethereum have in recent years become a popular part of long-term investment strategies. Although they are known for their high volatility, historically they have recorded significant growth in value. Many investors therefore approach cryptocurrencies with a long-term horizon and invest in them as a kind of digital "gold".

The situation on the cryptocurrency market has now also changed from the perspective of tax regulation. With the arrival of the law on digital money, a so-called time and value test for cryptocurrencies was introduced, which means that if an investor holds them long enough, their profit can be exempt from tax – similarly to stocks. This principle will also apply to our shares in real estate within InvestBay, which brings advantages for long-term investors looking for tax-efficient ways to grow capital.

If you believe in the future of blockchain technology and decentralised finance, the gradual purchase of cryptocurrencies can be an interesting option. It is important, however, to keep in mind that the cryptocurrency market is still young and unpredictable, so it is advisable to invest only part of your portfolio in it and to diversify the risk.

Do you want to dive into the topic in more depth? Read our article How and what to invest your money in best.

How to choose the right long-term investment?

Before you decide where to invest, it is important to consider:

Investment goals – Are you saving for retirement, a flat, or do you just want to grow your capital?
Riskiness of the investment – Stocks and cryptocurrencies are volatile, real estate is more stable.
Time horizon – The longer the investment, the higher the growth potential.

Do you want to secure a comfortable old age? Long-term investments in stocks, real estate or index funds can be an ideal choice.

Are you planning to invest in your children's education or future major expenses? More conservative investments, such as bonds or mutual funds, can offer a more stable return.

Do you want to maximise capital growth? Then it is advisable to consider more volatile but more profitable assets, such as growth stocks, cryptocurrencies or startup investments.

Each investment instrument has a different expected return and riskiness, so it is crucial to set realistic expectations and adjust your strategy accordingly.

Don't forget about diversification. Markets are unpredictable, and it is precisely diversification that helps minimise the risk of loss – we wrote a separate article about it: A comprehensive and practical guide to diversifying investments.

Every investment, however, still carries a certain risk. How high it is depends on the volatility of the given asset – that is, on how much its value fluctuates. We also wrote a comprehensive and detailed article on the topic of investment risk, which you can read here: link

Why is real estate one of the safest forms of long-term investing?

The value of real estate grows over the long term, it generates stable rental income and it provides protection against inflation.

Why invest in real estate?

Low volatility – Real estate is not subject to sharp swings like stocks or cryptocurrencies.
Two sources of income – Profit from renting and from the subsequent sale.
Value grows over time – Quality properties have a long-term upward trend.
Protection against inflation – Rents as well as property prices usually rise together with inflation.

The biggest problem? High entry costs and the worries of management.

InvestBay solves this, where you can invest in real estate from as little as CZK 2,500 and obtain a share of the returns without the worries of renting or maintenance. Crowd-owning makes it possible to co-own attractive properties abroad and to spread the investment risk.

The most common mistakes in long-term investments

In long-term investing, people often make the following mistakes:

Panic when the market falls – People tend to sell investments in a panic, especially during a crisis. But by selling in this unfavourable period they only realise a theoretical loss. It is necessary to realise that the investment is long-term, and short-term fluctuations are not a problem.
Insufficient diversification – Putting all your money into a single asset (for example, only into the stocks of one company or only into real estate) increases the risk of loss. Spreading investments across different sectors and types of assets helps stabilise returns.
Underestimating inflation – At first glance it may seem that if you simply keep your money in a current account or in "safe" products with a low return, you avoid risk. In reality, however, your money can lose purchasing power, because inflation gradually erodes it. Invest in assets that beat inflation and do not rely on a current account
Unrealistic expectations – If you expect your investment to grow by 20 % every year, you may be disappointed. Markets move cyclically and returns vary. Find out the realistic possible return on your investment.

Investing in real estate through InvestBay helps minimise risks while ensuring long-term growth in the value of your assets.

How much money to invest and how often?

Do you have spare funds (for example a tax refund) and are you considering whether it is better to invest them all at once or to spread them out over time? A lump-sum investment can be advantageous if the market is rising, because it gives your money more time for compound interest. On the other hand, if you invest at a time when markets are at their peak, you risk your portfolio recording a temporary loss.

Conversely, regular investing (even of small amounts) reduces the risk of bad market timing. When you invest the same amount every month, you automatically buy more assets when they are cheaper and fewer when they are more expensive.

It does not matter whether you invest regularly or as a lump sum – the key to success is discipline. For newcomers to investing we wrote the article The basics of investing, or How to start investing.

How to calculate the optimal amount for long-term saving

When determining the amount of the investment, it is good to consider your income, expenses and financial reserves. In general, it is recommended to invest at least 10–20 % of your income per month. If you are targeting a specific amount in the future, using an investment calculator will help you.

Don't wait for the ideal moment. Choose from our available investment properties, register, and start investing regularly and over the long term today.

Tip: Read the details about how InvestBay works.