Long-term investments are assets you expect to hold for more than a year. They might take the form of stocks, bonds or even real estate.
The term can be used in the context of personal investing or business investments. A personal investor might buy a variety of stocks and bonds with the expectation that they will hold them for many years while they build up a retirement fund. A business might buy new property or equipment with the expectation that it will be used for several years.
Long-term investments are typically chosen based on their expected returns, although risks also factor into this decision. It’s not just about how much money an investment is expected to make, but also about how risky it is relative to other options.
Why should I try long-term investing?
Investing for the long term has historically been one of the most successful ways to build wealth over time. On average, stock market returns have exceeded 10% annually since 1926. This means that $10,000 invested in 1926 would be worth more than $2 million today (as of December 2018).
Improving your long-term Investment Strategy
Investing for the long term requires realistic goals, an understanding of the impact of risk on the investments you make and the patience to wait for market fluctuations to even out. The process also involves planning for taxes and minimizing expenses.
When the market is high, everyone feels good. When the market is down, everyone feels bad. But your emotions are your worst enemy when it comes to investing.
Most people have a “set it and forget it” mentality when it comes to their financial future, but you can’t afford to be one of them.
Here are some tips from Newmark Group financial experts to help you keep your emotions in check and improve your long-term investment strategies:
Invest in Stocks
If you’re looking for long-term investments, then investing in stocks is a great choice. Buying shares in companies can be risky, but the potential for high returns is there if you’re willing to take on some risk. The best way to invest in stocks is to learn as much as you can about different companies and how investing in them works. If you’re just starting out, then you might want to consider investing through an online brokerage account so that you get access to research on different companies and funds.
Index Funds and ETFs
If you’re interested in buying a variety of stocks, but don’t have the time or know-how to choose specific companies, an index fund or ETF (exchange traded fund) might be a better option. These funds invest in a large group of stocks (usually hundreds). Some are passively managed, which means they track an index like the Standard & Poor’s 500 Index (S&P 500).
Avoid being a news junkie
There’s so much information coming at us each day that it’s hard to keep up with what’s important and what isn’t. But if you let yourself get sucked into the latest and greatest stories flying around the Internet, you’re going to end up making some big mistakes. Your brain is wired for survival, not for investing — that means you’re going to be more likely to buy during times of excitement and sell during times of panic. Don’t let this happen!
Have a plan and stick with it
You should have a written investing plan that outlines key decisions like how much you’ll invest in different types of investments, how often you’ll rebalance your portfolio, and how much risk you’re willing to take on.
Buy and Hold
Buy-and-hold is a passive investment strategy in which an investor buys stocks (or other types of securities such as ETFs) and holds them for a long period regardless of fluctuations in the market.
Long-term investors want to make sure that they are buying high quality companies at attractive prices. If you are going to buy and hold, it’s best to buy something you are familiar with, or something with strong fundamentals that can stand the test of time.
The key to successful long-term investing is to make sure your stocks have time to grow in value without having to sell them for any reason.
In order for buy and hold to work, you have to be able to weather market downturns and not panic.
Buy and hold works well when the economy is growing over the long term, since you will be buying more shares when prices are low and less when prices are high. It has been shown that long-term investors tend to do better than those who try to time the market
Work with Trusted Experts from Newmark Group
Long-term investing is the most common type of investing strategy, and also typically considered the safest. This is because you typically won’t need to touch your savings for decades, so you have ample time to ride out any bumps in the market.
In general, the longer you can afford to stay invested, the better off you’ll be. That’s because stocks are normally the best-performing asset class over a long period of time — but they’re also very volatile in the short term. You may see your investments lose value by 10% or even 20% over a few months — but that shouldn’t worry you if your money isn’t needed for many years.
However, even if you’re investing for a long-term goal like retirement, there are some steps to take to ensure you’re taking full advantage of your situation. Here are a few tips for maximizing your returns on a long-term investment strategy:
Work with trusted financial experts from Newmark Group: We make sure that all your investment decisions are backed by our expertise and efficient history of making safe and profitable investments for clients like yours. Our experts understand that each client has unique needs and goals and we work hard towards helping them achieve exactly that — in accordance with their risk appetite and tolerance.