5 Best Long-Term Investment Strategies To Use
Who doesn’t want quick returns? But anything that gives quick returns is to be handled cautiously. There are likely inherent risks, risks higher than normal. This is what happens in short-term investments. That said, it should not mean they shouldn’t be engaged. Involve yourself in these strategies when you have done your research and planning right. Moreover, quick returns are short-term. You will have to indulge in significant long-term investments for a more stable and consistent income stream and stability in life.
Ask any high-net-worth individual (HNWI) about the many investment strategies to employ for a secure future. They will advise you to invest your resources in long-term investment opportunities. These long-term investment strategies do not bring instant returns but, over time, grow into a substantial sum that can be used for years of lesser activity and during emergencies. But how to go about it? Well, here are five strategies that can help you use your money for long-term investment.
- Identify Your Long-Term Financial Goals
You must figure out why you intend to invest for the long term. The benefit of this assessment is that it will allow you to distribute your resources across different investments. For instance, you are planning for your child’s university education, so you must do your calculations and invest a monthly sum as a Systematic Investment Plan (SIP) in a good mutual fund. Similarly, you may want to travel after retirement and invest in blue-chip companies until the time comes.
Clarity is a precursor to sound investing, so you must find it in your financial goals.
- Don’t wait for the ‘right’ time
There is no ‘right’ time to invest. You should not fall into the trap of this very mainstream but misguided narrative. It is advised that you should start investing early. Let’s say you have a three-year-old child and want to plan for their future and can start investing in it. Or, you are in your late 30s and have only realized the value of investments. You shouldn’t wait but invest as soon as you decide.
The more you dilly-dally, the more aggressive investment strategies you may have to engage in. Start with a small sum, but do start.
- Investments with lock-in conditions
It is very tempting to withdraw profits or investments on loss prematurely. This can backfire because you aren’t letting the funds grow at their pace and are ignoring the one fundamental aspect of investment: there is no linear growth chart.
So, earmark a certain sum for investment options such as Public Provident Funds or Pension Systems. These instruments usually come with lock-in periods, so you cannot withdraw before the lock-in period expires. In case you do make a withdrawal, you will be subject to restrictive conditions.
- Portfolio diversification
Even though you are investing for the long term, you are investing nevertheless. You can never make a perfect guess about the future of any of your investments; risk is the defining feature of investments. So, make sure you do what every sound investor does: diversify.
Your portfolio should contain a range of investments; from real-estate investments to investments in equities, there should be a balance so that you can cushion your interests whenever the market goes berserk. For instance, avoid making excessive sectoral bets when investing in stocks. If the sector free falls, all your stocks will, and so will your money.
- Patience and practicality
Once you invest in the market, you will come across a bombardment of information filtering, which is not easy. There is a lot of hearsay that goes around in the market. Most of these are attempts to manipulate the market; falling for it can make you do detrimental things.
So, whenever you hear anything, do your independent analyses and consult professionals. Moreover, long-term investment means the investment must sit and grow over time. So, don’t give in to noises around and make hasty decisions. Let your funds grow, and in time they will show results.
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