Long Term Needs Flashcards, test questions and answers

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What is Long Term Needs?

Long-term needs are those that require attention and investment over a period of time, usually more than one year. They are the core of financial planning and help to ensure financial stability in the future. Examples of long-term needs include retirement planning, college savings plans, estate planning, investing in stocks or mutual funds, paying off debt, purchasing insurance coverage and saving for large purchases such as a home or car.The most important thing when it comes to long-term needs is to plan ahead. Setting up a budget and creating a savings plan will help you manage your finances better and prepare for unexpected expenses down the road. It’s also important to have an emergency fund available in case of unexpected job loss or medical bills so you don’t have to dip into other investments or fall behind on payments. Retirement planning should begin as soon as possible so that you can maximize your contributions towards retirement accounts such as 401(k)s or IRAs. Additionally, make sure your estate plan is up-to-date with clear instructions on how assets should be distributed after death. When it comes to investing for long-term needs, diversification is key in order to reduce risk while still earning returns from different types of investments. Investing in stocks or mutual funds can provide higher potential returns than traditional savings vehicles such as certificates of deposit (CDs). However, there is also more risk involved with these types of investments so it’s important to research each option carefully before making any decisions about where your money should go.