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One of the best ways to secure your financial future is to invest, and one of the best ways to invest is over the long term.

While many people think of investing as trying to make a short-term score in the stock market, it’s long-term investing where regular investors can really build wealth. By thinking and investing long term, you can meet your financial goals and increase your financial security.

Investors today have many ways to invest their money and can choose the level of risk that they’re willing to take to meet their needs. You can opt for very safe options such as a certificate of deposit (CD) or dial up the risk – and the potential return! – with investments such as stocks and stock mutual funds or ETFs.

Or you can do a little of everything, diversifying so that you have a portfolio that tends to do well in almost any investment environment.

What to consider

While long-term investing can be your path to a secure future, you’ll want to understand the importance of risk and time horizon in achieving your financial dreams.

In investing, to get a higher return, you generally have to take on more risk. So very safe investments such as CDs tend to have low yields, while medium-risk assets such as bonds have somewhat higher yields and high-risk stocks have still-higher returns. Investors who want to generate a higher return will need to take on higher risk.

While stocks as a whole have a strong record – the Standard & Poor’s 500 index has returned 10 percent over long periods – stocks are well-known for their volatility. It’s not unusual for a stock to gyrate 50 percent within a single year, either up or down.

[READ: 7 best short-term investments]

Can you withstand a higher level of risk to get a higher return? It’s key to know your risk tolerance and whether you’ll panic when your investments fall. At all costs you want to avoid selling an investment when it’s down, if it still has the potential to rise. It can be demoralizing to sell an investment, only to watch it continue to rise even higher.

One way you can actually lower your risk is by committing to holding your investments longer. The longer holding period gives you more time to ride out the ups and downs of the market. While the S&P 500 index has a great track record, those returns came over time, and over any short period, the index could be down substantially. So investors who put money into the market should be able to keep it there for at least three to five years, and the longer the better.

So you can use time as a huge ally in your investing. Also valuable for those who commit to invest for the long term, you don’t have to spend all your time watching your investments and fret about short-term moves. You can set up a long-term plan and then put it (mostly) on autopilot.

[BROKER REVIEWS: Charles Schwab | Fidelity | Robinhood | Vanguard | More]

Here are the best long-term investments in December:

  1. Growth stocks
  2. Stock funds
  3. Bond funds
  4. Dividend stocks
  5. Real estate
  6. Small-cap stocks
  7. Robo-adviser portfolio
  8. IRA CD

Overview: Top long-term investments in 2019

1. Growth stocks

In the world of stock investing, growth stocks are the Ferraris. They promise high growth and along with it, high investment returns. Growth stocks are often tech companies, but they don’t have to be. They generally plow all their profits back into the business, so they rarely pay out a dividend, at least not until their growth slows.

Growth stocks can be risky because often investors will pay a lot for the stock relative to the company’s earnings. So when a bear market or a recession arrives, these stocks can lose a lot of value very quickly. It’s like their sudden popularity disappears in an instant. However, growth stocks have been some of the best performers over time.

If you’re going to buy individual growth stocks, you’ll want to analyze the company carefully, and that can take a lot of time. And because of the volatility in growth stocks, you’ll want to have a high risk tolerance or commit to holding the stocks for at least three to five years.

Risk/reward: Growth stocks are among the riskier segments of the market because investors are willing to pay a lot for them. So when tough times arrive, these stocks can plummet. That said, the world’s biggest companies – the Facebooks, the Alphabets, the Amazons – have been high-growth companies, so the reward is potentially limitless if you can find the right company.

2. Stock funds

If you’re not quite up for spending the time and effort analyzing individual stocks, then a stock fund – either an ETF or a mutual fund – can be a great option. If you buy a broadly diversified fund – such as an S&P 500 index fund or a Nasdaq-100 index fund – you’re going to get many high-growth stocks as well as many others. But you’ll have a diversified and safer set of companies than if you own just a few individual stocks.

A stock fund is an excellent choice for an investor who wants to be more aggressive but doesn’t have the time or desire to make investing a full-time hobby. And by buying a stock fund, you’ll get the weighted average return of all the companies in the fund, so the fund will generally be less volatile than if you had held just a few stocks.

If you buy a fund that’s not broadly diversified – for example, a fund based on one industry – be aware that your fund will be less diversified than one based on a broad index such as the S&P 500. So if you purchased a fund based on the automotive industry, it may have a lot of exposure to oil prices. If oil prices rise, then it’s likely that many of the stocks in the fund could take a hit.

Risk/reward: A stock fund is less risky than buying individual positions and less work, too. But it can still move quite a bit in any given year, perhaps losing as much as 30 percent or even gaining 30 percent in some of its more extreme years.

That said, a stock fund is going to be less work to own and follow than individual stocks, but because you own more companies – and not all of them are going to excel in any given year – your returns should be more stable. With a stock fund you’ll also have plenty of potential upside.

[READ: Best index funds]

3. Bond funds

A bond fund – either as a mutual fund or ETF – contains numerous bonds often from a variety of issuers. Bond funds are typically categorized by the type of bond in the fund – the bond’s duration, its riskiness, the issuer (corporate, municipality or federal government) and other factors. So if you’re looking for a bond fund, there’s a variety of fund choices to meet your needs.

When a company or government issues a bond, it agrees to pay the bond’s owner a set amount of interest annually. At the end of the bond’s term, the issuer repays the principal amount of the bond, and the bond is redeemed.

A bond can be one of the safer investments, and bonds become even safer as part of a fund. Because a fund might own hundreds of bond types, across many different issuers, it diversifies its holdings and lessens the impact on the portfolio of any one bond defaulting.

Risk/reward: While bonds can fluctuate, a bond fund will remain relatively stable, though it may move in response to movements in the prevailing interest rate. Bonds are considered relatively safe, relative to stocks, but not all issuers are the same. Government issuers, especially the federal government, are considered quite safe, while the riskiness of corporate issuers can range from slightly less so to much more risky.

The return on a bond or bond fund is typically much less than it would be on a stock fund, perhaps 4 to 5 percent annually but less on government bonds. It’s also much less risky.

4. Dividend stocks

Where growth stocks are the sports cars of the stock world, dividend stocks are sedans – they can achieve solid returns but they’re unlikely to speed higher as fast as growth stocks.

A dividend stock is simply one that pays a dividend —  a regular cash payout. Many stocks offer a dividend, but they’re more typically found among older, more mature companies that have a lesser need for their cash. Dividend stocks are popular among older investors because they produce a regular income, and the best stocks grow that dividend over time, so you can earn more than you would with the fixed payout of a bond, for example.

Risk/reward: While dividend stocks tend to be less volatile than growth stocks, don’t assume they won’t rise and fall significantly, especially if the stock market enters a rough period. However, a dividend-paying company is usually more mature and established than a growth company and so it’s generally considered safer. That said, if a dividend-paying company doesn’t earn enough to pay its dividend, it will cut the payout, and its stock may plummet as a result.

The big appeal of a dividend stock is the payout, and some of the top companies pay 2 or 3 percent annually, sometimes more. But importantly they can raise their payouts 8 or 10 percent per year for long periods of time, so you’ll get a pay raise, typically each year. The returns here can be high, but won’t usually be as great as with growth stocks. And if you’d prefer to go with a dividend stock fund so that you can own a diversified set of stocks, you’ll find plenty available.

5. Real estate

In many ways, real estate is the prototypical long-term investment. It takes a good bit of money to get started, the commissions are quite high, and the returns often come from holding an asset for a long time and rarely over just a few years. Still, real estate is Americans’ favorite investment, according to a 2019 Bankrate study.

Real estate can be an attractive investment, in part because you can borrow the bank’s money for most of the investment and then pay it back over time. That’s especially popular as interest rates sit near attractive lows. For those who want to be their own boss, owning a property gives them that opportunity, and there are numerous tax laws that benefit owners of property especially.

That said, while real estate is often considered a passive investment, you may have to do quite a bit of active management if you’re renting the property.

Risk/reward: Any time you’re borrowing significant amounts of money, you’re putting extra stress on an investment turning out well. But even if you buy real estate with all cash, you’ll have a lot of money tied up in one asset, and that lack of diversification can create problems if something happens to the asset. And even if you don’t have a tenant for the property, you’ll need to keep paying the mortgage and other maintenance costs out of your own pocket.

While the risks can be high, the rewards can be quite high as well. If you’ve selected a good property and manage it well, you can earn many times your investment if you’re willing to hold the asset over time. And if you pay off the mortgage on a property, you can enjoy greater stability and cash flow, which makes rental property an attractive option for older investors.

[READ: 10 tips for buying rental property]

6. Small-cap stocks

Investors’ interest in small-cap stocks – the stocks of relatively small companies – can mainly be attributed to the fact that they have the potential to grow quickly or capitalize on an emerging market over time. In fact, retail giant Amazon began as a small-cap stock, and made investors who held on to the stock very rich, indeed. Small-cap stocks are often also high-growth stocks, but not always.

Like high-growth stocks, small-cap stocks tend to be riskier. Small companies are just more risky in general, because they have fewer financial resources, less access to capital markets and less power in their markets (less brand recognition, for example). But well-run companies can do very well for investors, especially if they can continue growing and gaining scale.

Like growth stocks, investors will often pay a lot for the earnings of a small-cap stock, especially if it has the potential to grow or become a leading company someday. And this high price tag on a company means that small-cap stocks may fall quickly during a tough spot in the market.

If you’re going to buy individual companies, you must be able to analyze them, and that requires time and effort. So buying small companies is not for everyone.

Risk/reward: Small-cap companies can be quite volatile, and may fluctuate dramatically from year to year. On top of the price movement, the business is generally less established than a larger company and has less financial resources. So small-caps are considered to have more business risk than medium and large companies.

The reward for finding a successful small-cap stock is immense, and you could easily find 20 percent annual returns or more for decades if you’re able to buy a true hidden gem such as Amazon before anyone can really see how successful it might eventually become.

7. Robo-adviser portfolio

Robo-advisers are another great alternative if you don’t want to do much investing yourself and prefer to leave it all to an experienced professional. With a robo-adviser you’ll simply deposit money into the robo account, and it automatically invests it based on your goals, time horizon and risk tolerance. You’ll fill out some questionnaires when you start so the robo-adviser understands what you need from the service, and then it manages the whole process. The robo-adviser will select funds, typically low-cost ETFs, and build you a portfolio.

Your cost for the service? The management fee charged by the robo-adviser, often around 0.25 percent annually, plus the cost of any funds in the account. Investment funds charge by how much you have invested with them, but funds in robo accounts typically cost around 0.06 percent to 0.15 percent, or $6 to $15 per $10,000 invested.

With a robo-adviser you can set the account to be as aggressive or conservative as you want it to be. If you want all stocks all the time, you can go that route. If you want the account to be primarily in cash or a basic savings accounts, then two of the leading robo-advisers – Wealthfront and Betterment – have some great interest rates on their accounts, too.

But at their best a robo-adviser can build you a broadly diversified investment portfolio that can meet your long-term needs.

Risk/reward: The risks of a robo-adviser depend a lot on your investments. If you buy a lot of stock funds because you have a high risk tolerance, you can expect more variability than if you buy bonds or hold cash in a savings account. So risk is in what you own.

The potential reward on a robo-adviser account also varies based on the investments and can range from very high if you own mostly stock funds to low if you hold safer assets such as cash in a savings account. A robo-adviser will often build a diversified portfolio so that you have a more stable series of annual returns but that comes at the cost of a somewhat lower overall return.

[READ: The best robo-advisers right now]

8. IRA CD

An IRA CD is a good option if you’re risk-averse and want a guaranteed income without any chance of loss. Like the name says, this investment is just a CD inside an IRA. And inside a tax-friendly IRA, you’ll avoid taxes on the interest you accrue, as long as you stick to the plan’s rules.

Even if you don’t get a CD within your IRA, an IRA is a very smart investing decision.

Risk/reward: The risk on an IRA CD might not be quite where you expect it. You have almost no risk at all of not receiving your payout and your principal when the CD matures. It’s about as safe an investment as exists, and the FDIC can guarantee your account at any individual insured institution up to $250,000 per depositor.

The real risk on an IRA CD is whether you’re earning enough to beat inflation. It’s one reason that, if you have a core CD portfolio, a great strategy actually adds some risk to get a much better long-term return, especially if you have a long time until you need the money.

[COMPARE: Best CD rates]  

Bottom line

Investing for the long term is one of the best ways to build wealth over time. But the first step is learning to think long term, and avoiding obsessively following the markets daily ups and downs.

If you’re looking to get started with long-term investing, see Bankrate’s review of the top online brokers for beginners. If you’re looking for an experienced professional to do the investing for you, then consider a leading robo-adviser such as Betterment.

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