Long-Term Investments

The accounting flavor of this term means that you’ve invested in something and held it over a year so that, for tax purposes, you’ll be taxed at the lower, friendlier, more loving, long-term gain tax rate. The higher, meaner, uglier alternative is the ordinary income or short-term gain tax rate. You don’t want that.

The edgier form of the term just applies to the philosophy of thinking…long. Buying shares in a public company used to be long-term by default. Transaction costs were so high that it was punishing for investors to trade much, anyway. But commissions went from something like a buck a share to being just a few pennies. So those frictions went away, and trading was cheap and easy. Investment time horizons could shrink dramatically and still be potentially lucrative.

Other notions of the term click as well. Education is a long-term investment. Do the math on going to college versus just driving for Uber during those four occasionally-sober years. Companies do the same when they upgrade factories or replace workers with more efficient, non-spitty or non-strikey workers.