How you should approach long-term investing

It’s never a wise move to dive into long-term investing without first properly understanding what you’re getting yourself into.

When you do that you simply make yourself more vulnerable to slip-ups and mistakes which will deprive you of the long-term gains you’re searching for. The way you approach this entire project will dictate how well it ends up turning out for you so it’s best to be informed and in possession of the right understanding before you begin.

Strategies vary from investor to investor, but understanding the basics and not going into this with your head filled with wild expectations and unrealistic ambitions is key. The clue is in the phrase ‘long-term’. You can’t expect results to come overnight and you might not see any returns at all for many years depending on your strategy; you’re going to need to be prepared for that going in.

So read on now if you want to fill some gaps in your knowledge and learn more about what it takes to succeed as a long-term investor. It will be a long journey for you, but it all starts now.

Don’t focus on your emotions

Emotions can be very dangerous things indeed when you’re looking to invest. You simply can’t make big decisions based on your emotions and feelings because they’re irrelevant in the world of investing. The success or failure of your investments will never be influenced by your emotions, and that’s why they should be disregarded.

Keeping a calm hard and assessing things with your brain rather than your heart is the only way to go if you want to invest properly and successfully. Just make sure you’re clear in your mind about why you’re making the decisions you’re making.

Ignore those hot tips

The next time someone passes you a hot tip that they promise will pay off for you in the long-term, don’t take them at face value. They might have ulterior motives for wanting people to back the stock so you need to be very careful indeed. There are all kinds of reasons for people to do that.

You should either simply ignore those hot tips altogether or look into them more carefully before deciding whether or not to invest. Even if the tipster’s intentions are not bad, they’re still probably wrong about the investment because most of those people are 99 per cent of the time.

If you want to buy and hold, prepare and research very carefully

For most long-term investors, buying and holding is the best way to invest because it allows you to keep hold of the investments and have them pay off way down the line. Preparation and research are even more important for these kinds of investments though.

Will they pay off for you? For some people, it might be a good idea to invest in properties because they continually provide you with an income via rent while their prices rise. Buying condominiums is a good way to do this if you’re interested. If you want to stick to the stock market, research carefully.

Always be thinking about what’s coming next

You need to have one eye on the future when you’re taking a long-term approach to investing. If a business doesn’t have much of a future ahead of it, it’s not worth investing in. Of course, you can’t predict the future, nobody can, but you can assess trends in markets and consider where technology might take particular industries in the years ahead.

If a company looks like it’s breaking new ground and causing disruptions in its industry while also winning over new customers, it might be a good idea to jump on board sooner rather than later.

There’s no such thing as the faultless strategy

If someone approaches you and tells you that they have a faultless strategy for long-term investments that you simply have to make use of, you should be immediately suspicious. Pretty much any strategy can produce results in the right context and with the right investments. But no strategy is faultless.

You will come to accept this sooner or later as an inventor, and just because a strategy begins to produce less than ideal results for you, that doesn’t mean you should ditch it right away. What’s most important is consistency; you’ll never find success if you’re always chopping and changing.

Don’t bother with market timing, assess risk instead

Timing the market is about as useful as praying for success with your investments; in other words, there is no reason to believe doing so will have any impact on how your investments turn out. It might instinctively feel like the thing you should be doing but don’t be fooled by that.

Instead of trying to time the market and failing, you should focus more on assessing risks before investing your money. This is the kind of preparatory work that will pay off for you in the long-term, so it makes sense to do it. It has real-life implications for your investing and it shouldn’t be skipped.

Remain patient

Patience is a virtue and it’s a very important one in the world of investing. If you’re not patient with your investments, you will end up entering panic mode and backing out of an investment or even going all in on it when that’s simply not the smartest thing you could do at that time.

To put it simply, impatience leads to bad calls, which lead to a loss of money for you. That’s clearly not what you want so you should get into the habit of sitting back and assessing things from a safe distance rather than feeling like you need to respond instantly to every major market twist.

There is no guarantee that you will succeed with your long-term investment plans, but that’s the case for literally everybody out there giving this a try. However, if you take note of these points, you will certainly be in a much better position to avoid common mistakes and find lasting success with your investments.

Free newsletter signup
Never miss another Bankless Times news story as we send you hand-picked articles every morning
We hate spam. Your email address will not be sold or shared with anyone else. You will only receive our daily newsletter. You can unsubscribe at any time.