Many investors know that staying invested long-term is one of the most powerful and consistent ways to build wealth.
And according to data from Blackrock, the longer you stay invested, the greater your likelihood of positive returns. In fact, over 1-month periods, investors made money 62.9% of the time and lost 37.1% of the time. But if you increase the period to 10 years, investors made money 94.9% of the time and lost money only 5.1% of the time.
The data is clear: long-term investors get rewarded.
But staying invested is often easier said than done, as markets can be volatile, forcing many investors to sell their assets and flee to the sidelines. Unfortunately, this can harm your ability to reach your financial goals and delay retirement by years or more. So to avoid those consequences and stay on track to reach all your financial goals and more, consider the following:
Here Are 5 Tips for Successful Long-Term Investing
1. Focus on Your Goals
To successfully invest for the long-term, you have to start with your unique “why.”
For most, that comes in the form of future financial goals. So whether you’re investing for early retirement or sending your child to college, it’s critical to know precisely why you’re investing your hard-earned money.
This does two important things:
First, it helps you identify the correct investments for your situation by determining how long you have until you need the money. For example, many college investment funds will create a phased investment portfolio known as a glide path. This lets you choose your investments based on the age of your child. So, the closer your child gets to college, the less aggressive the investments become. This is a great way to ensure that you’re taking the proper risk with your investments.
Second, it helps you focus on the future instead of the present. Markets can be scary or enticing in the short run, but by zooming out and focusing on the future, investors increase their chances of staying invested for the long haul.
2. Get Educated
Next, you don’t have to become a wall-street guru or even the next best financial advisor in Utah, but it can be valuable to understand some of the fundamentals of investing. This will help you make sense of the market’s short-term movements while understanding your best options for success.
One book to consider is The Intelligent Investor by Benjamin Graham. Graham was a renowned investor and mentor to billionaire investor Warren Buffett. In his book, Graham does a great job of cutting through the noise to educate investors on the most important things they need to know to achieve long-term investing success.
3. Understand the Impact of Your Emotions
One of the most significant risks investors face is their own emotions and behavioral biases.
In short, humans are wired to survive, and part of that wiring can lead us to avoid painful or uncertain experiences at all costs. But unfortunately, as an investor, short-term volatility and uncertainty are the prices we pay for long-term success. The key is understanding that our emotions will try to push us into panic-selling to relieve the pain.
But while that may temporarily relieve our fear and uncertainty, it can devastate our finances. Fortunately, by developing an awareness of our emotions, we can create space between how we feel and react. And as an investor, that can make all the difference.
4. Pick a Strategy and Stick With It
Next, it can be valuable to pick an investing strategy and commit to it for the long term.
Your investment strategy will be the framework or model you use to design your portfolio for the long term. There are many strategies to consider, such as growth or value investing, but a good strategy should have elements of the following:
- Low fees to avoid cutting into returns.
- Diversification to spread out your risk.
- Just enough risk to achieve your goals but not so much that you jeopardize your investments.
- Tax optimization to reduce the impact of tax drag on your portfolio.
Once you’ve identified the right strategy for you, commit to it for the long term. That’s not to say you can never change your strategy, but doing so should not be taken lightly. To be successful in the long term, you should avoid chasing short-term gains and stick to your plan.
5. Don’t Be Afraid to Ask for Professional Help
Lastly, don’t be afraid to ask for professional help.
Just like you can choose to hire a tax professional for your tax needs or an attorney for your legal needs, hiring an investment professional for your investment needs may be worthwhile. A trusted professional can help you identify your goals, create a unique investment strategy to help you reach them, and work with you to stay invested for the long run.
TrueNorth Wealth Is Here to Help
Work with a trusted CFP® expert at TrueNorth Wealth to create a personalized investment strategy and portfolio designed to help you achieve your financial objectives.
TrueNorth Financial ranks highly among Utah and Idaho’s wealth management organizations. At TrueNorth Wealth, our mission is to assist our customers in achieving their financial goals over the long term and to ensure that they get the most pleasure possible from their investments. To do this, we match each of our customers with a skilled CFP® professional who is supported by a stellar group of experts. If you’re looking for assistance with your financial planning in Boise, ID, and throughout Utah, schedule a free consultation today!