Is BAC Stock a Solid Long Term Investment?


A lot of people prefer short-term investments. After all, whatever else that can be said about investing in them, it tends to be a very engaging process. This is because short-term investors profit from small price changes in short-term investments, meaning that they need to keep a constant watch for suitable opportunities. In fact, interested individuals have to do so if they want to make significant amounts of money because profiting from small price changes makes them very reliant on sheer trading volume. Of course, there are plenty of people who are less than enthused by the thought of having to keep a constant watch for suitable opportunities. Sometimes, this is because they lack the necessary time. Other times, this is because they lack the necessary appetite for risk. Whatever the exact cause, there are plenty of people who would be better-off making long-term investments, which are meant to be held for years and years or even decades and decades to come. Having that, it is important to note that long-term investment is as broad a concept as short-term investment. As such, different investors can have different reasons to make such investments. For example, one long-term investor might want a reliable source of steady income. Meanwhile, another long-term investor might be more interested in a stock with excellent prospects of growth even if they can’t collect their gains until they choose to sell. Due to this, whether a particular stock can be considered a good long-term investment depends on what interested individuals have in mind.

How Does Bank of America Make Its Money?

The Bank of America is a name that comes up a lot when people think about potential long-term investments. This makes sense because it is a very well-established bank, so much so that it is the second biggest bank in the United States as well as the eighth biggest bank in the entire world. Of course, just size isn’t enough information to say much about a company’s suitability as an investment, so it is also worth mentioning that the Bank of America has a decent reputation in other respects as well. For instance, it earned the title of “World’s Best Bank” from the Euromoney Institutional Investor in 2018, which should give interested individuals some measure of confidence in its operations. As for how the Bank of America makes it money, well, its size should make it no surprise to learn that it is involved in a number of things. Its single biggest division would be its consumer banking, which focuses on providing banking services to both consumers and small businesses. Besides this, the Bank of America is also involved in providing banking services to bigger businesses, managing the investments of both individuals and institutions, and other operations.

Can Bank of America Be Considered a Good Choice for a Long-Term Investment?

There are publications out there that have voiced their belief that the Bank of America can be a good long-term investment for interested individuals. For starters, it is expected that central banks will be increasing interest rates. This is bad news for some companies because higher interest rates can mean higher costs for them. However, bigger banks can benefit from the same because of their financial products, meaning that this can be a plus for the Bank of America as well as its counterparts.

Besides this general trend, the Bank of America has its own unique advantages as well. For long-term investors, one of the most interesting to them should be its CEO Brian Moynihan’s stated preference for straightforward lending over more exotic and thus often riskier financial products. Something that might be particularly appealing for those who remember how a number of financial institutions ran into serious trouble because of exotic financial products during the Great Recession. This preference is part of the Bank of America’s so-called “Responsible Growth” strategy, which is focused on steady, sustainable, long-term growth rather than short bursts that look good but may or may not hold for the long run. Moreover, this strategy isn’t a new thing. Instead, it has been in use since 2010, with the result that it has been fulfilling its promise ever since.

Moving on, some people might be more interested in fintech companies, which are getting a lot of interest for good reason. However, conventional banks such as the Bank of America still possess some serious advantages that won’t be going away anytime soon. For example, they have plenty of resources plus well-established networks, meaning that they can offer better terms than companies that haven’t had the time to spread their roots. Similarly, these resources mean that conventional banks are also capable of pouring a huge amount of money into their own R&D, meaning that they are by no means guaranteed to fall back fintech pioneers. If anything, the consistent reliability of the Bank of America should make it more appealing for long-term investors who want some stability for their portfolio for quite some time to come.

Further Considerations

As always, it is important to remember that companies are complicated. Thanks to that, it isn’t possible to get a good understanding of their prospects by just reading an article or even a slew of articles. Instead, if people are serious about making their own investments rather than entrusting the matter to the professionals, they should put serious effort into understanding the potential candidates. Something that should enable them to make informed decisions that are better for their interests than otherwise possible. This is particularly important because they are the ones who know their investing goals the best, meaning that they are in the best position to figure out what they want out of their investments. Having said that, the Bank of America seems to be a solid choice for a long-term investment. As such, interested individuals could do worse than start their research into potential long-term investments by taking a good, long look at its operations as well as its prospects for the future.

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