What is "compared to a short-term investment?

A short-term investment typically refers to an investment that is held for a shorter period of time, typically one year or less. These investments are usually considered to be lower risk, as they are less exposed to market fluctuations over a short period of time.

In comparison, a long-term investment is held for a longer period of time, typically more than one year. These investments are generally considered to be higher risk, as they are exposed to market fluctuations over a longer period of time.

The potential returns on a short-term investment are typically lower than those on a long-term investment, as short-term investments are generally considered to be less risky. However, short-term investments can provide more immediate liquidity, allowing investors to access their funds quickly if needed.

Overall, short-term investments are often used to preserve capital and provide a lower-risk option for investors who may need access to their funds in the near future. Long-term investments, on the other hand, are typically used to build wealth over a longer period of time and may involve more risk but potentially higher returns.