Retirement planning vs. YOLO – short-, medium- and long-term investment strategies

3 min 45

Exquisite wine and cheese, a new racing bike, ski equipment for the winter, a vacation in Sardinia, a house by the lake, or retirement planning – you probably have various savings goals. Unfortunately, that makes it quite tricky to answer how and in what you should invest your money. There are countless strategies and advice for investing and investment strategies. In this blog article, we’ll provide an overview, and you’ll learn how to address your short-, medium-, and long-term financial goals when investing your money. 

Short-term investment strategy: 0-2 years

If you plan to invest a certain amount for only 0-2 years, it’s called short-term investments. This includes smaller purchases, repairs, ventures, or even a vacation. 

With short-term investments, you should invest your money liquidly, meaning you can access your money immediately. It would help if you also had savings for a rainy day of about two to three months of your salary for unexpected expenses. This will ensure that you do not have to immediately access your invested money when the exchange rate is falling. In general, you should choose a low-risk investment for short-term money. You could, for example, build your portfolio with a majority of bonds and fewer stocks. UnitPlus has the optimal solution for this – but more about that later.

Medium-term investment strategy: 2-5 years 

Are you saving for a house deposit or a world trip with a 2-5 year time horizon? If you invest your money thoughtfully, you can earn a return and reach your goals faster. Then you should invest your money accordingly. Again, a balanced investment portfolio is recommended, which you can then liquidate (i.e., turn into cash) with some flexibility depending on the price level. You should invest your money so that there are no penalties should you want to access the funds earlier than expected.

When asking yourself how much risk you are willing to take, you should answer the following questions: 

Is there a strict deadline for when you need to access the money? For example, do you have to pay off your student loan by a specific date? Or have you already set a time frame for your sabbatical year? Then you should invest more conservatively. The last thing you want is a stock market crash at the wrong time that tears a hole in your savings just when you need the money. 

On the other hand, if you are more flexible, because you want to buy a mini-house in about two (or even three or four) years, you can also opt for a riskier (and more profitable) investment strategy. Spending goals that you can time with the ups and downs of the stock market give you the freedom to take on a little more risk. The UnitPlus solution can also optimally serve this investment strategy – but more on that below.

Long-term investment strategy: 5+ years 

Stocks rise and fall; it’s in their nature (see blog). But, in the long run, the stock market rises; history shows that. The DAX, for example, has averaged 8% returns over the last 30 years – despite the financial crisis and Corona. 

Do you plan to spend your money only in 5 or more years? Then you have the freedom to choose a portfolio that consists mainly of stocks. This way, you can benefit from the stock market’s higher returns.

Do you want to buy a forest for conservation, adopt a herd of zebras, or cover your everyday amusement park expenses as a retiree? It pays to go for a slightly riskier portfolio with higher potential returns for longer-term goals. After all, fluctuations and price drops balance each other over time. 

In the world of long-term investing, forgetting (or patience, depending on your character type) is rewarded – financial experts agree that the best strategy for long-term wealth accumulation is a broadly diversified portfolio in which you ignore price fluctuations. Of course, we probably don’t need to mention that UnitPlus is also a good solution here – but more about that now.

Here’s what we do at UnitPlus

UnitPlus allows you to invest according to your risk behavior and depending on your short-, medium- and long-term savings goals. Whether you want to invest riskily or moderately, UnitPlus allows you to invest according to your individual needs. The remarkable thing about it is that you don’t have to be hesitant about whether you will get your invested money in the short or medium term. The flexibility of our UnitPlus card allows you to pay whenever you want with the invested capital. Book a vacation with short-term investments? No problem. Are you saving for a car with a medium investment time frame? Pay for it directly with your portfolio. Or invest long-term and win more returns over a more extended period. Full flexibility, even when investing.

Not sure how much to invest or which portfolio is right for you? No problem, UnitPlus will create a customized savings plan for you and help you find the right portfolio.

Hanna Hodel