Which financial instrument is typically used for long-term investments?

Bonds are typically used for long-term investments because they are debt instruments issued by entities such as governments or corporations to raise capital. When you purchase a bond, you are essentially lending money to the issuer in exchange for periodic interest payments and the return of the bond's face value when it matures, which can be several years or even decades in the future. This characteristic aligns well with long-term financial goals, such as retirement planning or funding a child’s education, where investors seek to earn a stable return over an extended period.

In contrast, a savings account and checking account are primarily designed for short-term financial management. They provide liquidity and easy access to funds rather than the potential for higher returns over time. Cash, while liquid, does not earn significant interest and is generally considered a poor long-term investment. Therefore, bonds stand out as the preferred option for those looking to invest over a longer timeframe.