Long-term investments are most commonly used to save money for which of the following purposes?

• A. Retirement planning
• B. Daily operating expenses
• C. Petty cash needs
• D. Short-term inventory purchases

Answer: (A)

Verified step by step guidance

1. Understand the concept of long-term investments: These are assets or funds that are intended to be held for an extended period, typically more than a year, to achieve financial goals such as wealth accumulation or retirement planning.
2. Analyze the purpose of long-term investments: They are generally used for goals that require significant time to achieve, such as retirement planning, rather than short-term needs like daily operating expenses or petty cash.
3. Evaluate the options provided: Daily operating expenses, petty cash needs, and short-term inventory purchases are all short-term financial needs and are not suitable for long-term investments.
4. Recognize that retirement planning aligns with the nature of long-term investments: Retirement planning requires saving and investing over decades to ensure financial security in later years.
5. Conclude that the correct purpose for long-term investments is retirement planning, as it matches the long-term horizon and financial goals associated with these types of investments.