The key to being successful with your investments is playing the long game. For you to save for your retirement or pay for your children’s college education, you need a long-term investment strategy. However, long-term investing can be challenging; here are tips and strategies to help you stay the course.
Long-term investments have a timeframe of over 10 years.
- Automate your investment contributions
Make a commitment to contribute a set amount of money into your investment accounts every month. Next, automate this contribution to avoid spending the money by accident or trying to time the market. Don’t fall into the trap of thinking you will invest when you have more money. Start now and stay consistent.
- Choose an investment strategy and stick to it
Once you find a long-term investment strategy that works for your financial goals and risk tolerance, stick to it. Avoid being swayed by the media or ‘hot stock tips’ from your family or friends. Your investments need time to mature so that you can get maximum benefits from them.
- Avoid withdrawing your investment when the market goes down short term
Every once in a while, there are negative short-term market movements that can cause a dip in the value of your investment portfolio. Most investors panic, which leads them to withdraw their investments prematurely. Instead of being driven by emotions or trying to time the market focus on your time in the market, stay the course and the market will correct itself.
Some investment strategies such as robo-advisory and mutual funds make it easy for you to invest long-term. Let’s look at each of them.
A robo-advisor is a software-based investment service that uses proprietary algorithms to invest your money. First, your risk appetite is analyzed and then the algorithm invests your money into diverse investment vehicles. Robo-advisors provide tailored services that match your risk tolerance, financial goals, and investment timeframe.
One benefit of robo-advisors is that they are less prone to errors compared to human investment advisors. What’s more, they simplify the investment process, rebalance your portfolio periodically, have low fees and allocate your assets diversely, especially through investing in ETFs rather than individual stocks. These advantages make robo-advisors the best choice for long-term investment especially for novice investors who look to simplify the investment process without sacrificing performance. This provides a level of comfort and peace of mind that other investment methods often lack.
- Mutual funds
Mutual funds are investment vehicles where many investors pool their money which is then invested in the stock market, bonds, and money markets. These funds are run by money managers who put the fund’s assets in different investment vehicles so that investors can get capital gains.
Mutual funds are a good long-term investment strategy because they are diversified meaning that you don’t have to pick stocks.
Stick to your investments in the long-term, and allow your wealth to grow over time instead of letting your plans fluctuate with the market.
At SmartWealth, we utilize a cost-effective, long-term investment strategy as the market historically trends upwards over time. Make sure to always take a step back, focus on your overall goal, and avoid reacting emotionally to fluctuations by concentrating on the bigger picture for the long run.