Without Doubt, long term investing is the only sure shot way to achieve financial prosperity when you need it the most. Investing for retirement is something that most of us do, and in many cases it’s the only investment with such a time horizon. Your purpose may be different, but what matters is a investment that you can always rely upon for financial security.
Relying too much on social security is not a good decision, given how fast the economic environment is changing for the worse. Long term investments will not offer mental peace, but these will come handy in different circumstances like when you retire, face any heath problems, buying a home and so on.
Well, I hope we do not require focusing too much on importance of long term investing, so let’s jump off to strategies that work.
Choosing the right broker and an investment advisor is necessary; however, you can skip the advisor if you are confident about your decisions.
Your objectives should be clear before deciding upon an investment vehicle, so have a rough idea about what you need and in how much time. Then you must evaluate your finances to know how much you can afford each month. Next thing is to commit to what you decide at first place.
The best way to go about investing for long term is to start small and keep doing it at regular intervals. You should not invest large sums in one go as then averaging becomes out of question. While investing in stocks, you can never be sure of the best buy prices, so regular investing helps averaging costs. If you can invest up to 20% of your monthly income, then it’s possible to retire without compromising with any of your current expenses.
Imp- If you are entitled to receive tax refunds each year, why not invest it in the first place.
It’s important that you keep generating returns, so you will have to look towards investment options with higher yield. However, your portfolio should be balanced and it is not necessary to invest in aggressive stocks and funds. The main battle here is to preserve capital and at the same time benefit from compounded returns.
A layman investor can start with a few small systematic investment plans in different funds, as this will automatically diversify risk and provide stable returns. Others can directly invest in stocks, but their allocation should be properly diversified across sectors and companies of different sizes. Another good way to cut down the research work and get a greater exposure is investing ETFs. This way you can invest in sector specific funds from your investment account and also diversify into overseas markets, currencies and commodities.
Always remember, financial instruments can tempt you to trade, take advantage of highs and lows, and this way you can get distracted from your long term objectives. So, stay focused and have patience, you really do not want to end up gambling with your future security.
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