Long Term Investments Strategies Stock Market

Needs change with time. And, so does the stock market. We have two options for investing in the financial market. We can invest for short term or long term. It is seen that short term investments may bring us short term gains but it could also prove costly in the long run. Long term investments serve as a balanced way of investment.

Why invest for a long term?

Long term investments reflect the underlying reality of companies and the returns they offer their shareholders. On the contrary, short term investments are prone to turbulence in the stock market, erratic investor behavior. As a result, there is temporary fall and rise in share prices. It is also seen that holding on to investments for a longer period of time minimizes the risk of losing money.

One factor to bear in mind is that the past performance has no bearing on the future. The stock market fluctuations will directly impact your fund prices.

Long term investment strategies:

Time your investments:

In case of a long term investment, you will need to invest for a period of at least ten years to be able to earn returns over inflation. Long term investment is about ‘time’ and not ‘timing’.

Try to invest on a regular basis:

Investing at regular intervals can help smoothen out crests and troughs of your investment. When you invest a lump sum amount in an investment, you run a greater risk. This is because a fall in the market will result in losses for you. On the other hand, if you invest on a regular basis, your losses and gains will even out.

Choose investment strategies that you understand:

Always choose investment strategies that you can understand. It is a good idea to avoid complicated investment strategies which are beyond your comprehension.

Keep reserve cash handy instead of investing the entire amount:

While opting for long term investments, you will need to make allowance for your unexpected needs. Therefore, it is recommended to invest in some short term strategies. This will ensure that you don’t have to disturb your long-term investments.

Invest in stocks:

One of the best investment tools to counter inflation is an investment in stock. It helps in wealth creation and expansion of portfolio.

Diversify:

The more you diversify your investments the more you protect them from the ups and downs of the stock market.

Tweak your investments:

With changes in the stock market, you will have to be alert enough to ‘recalibrate’ your investments.  Although you don’t need to do any major overhauling, just minor tweaking is sufficient. You also do not need to make these alterations frequently.

Conclusion:

It has been seen that most investments whether equity or shares yield a better result if they are held on for a long period of time. Therefore, it is a good idea to invest and let time do its work.

Greg Silberman is a reputed financial consultant in Georgia, Atlanta. He is well-experienced in the field of investments. He can suggest long term investment strategies to his clients based on the changes in the stock market.