Top 5 Keys to Successful Long-Term Investing

It's nearly impossible to achieve financial freedom if you only rely on your job to get you there. Even if you accumulate a lot of money, without investments your cash flow will stop the moment you quit working. The safest way to achieve financial freedom is through long-term investing. In this article, we are going to list a few important keys to successful long-term investing.

Consistency is the Name of the Game

Long-term investing is all about riding through the rough patches and catching the long-term trend. Historically, stock markets are always growing. There may be years of slump, but overall, it's always growing. To take advantage of the long-term macro trend, be consistent in putting aside a portion of your income for investment purposes. If somebody from TV starts shouting a "crash" is coming, just ignore him or her and stay on the course. With consistency and time, chances are that your investment will grow tremendously.


One way to protect your investment portfolio from taking big hits is diversification. However, keep in mind that diversification needs to be balanced. If you diversify too much, you may end up with "di-worse- ification." In other words, you'll cause your investment portfolio to underperform.
A great example of diversification is, for example, 25% on stocks, 25% on bonds, 25% on forex options trading and 25% on insurance-backed investments. Keep in mind that this is just an example and it's best that you consult with a financial consultant to ensure that you have the optimum diversification numbers.
One last tip when it comes to diversification: if you want to save money, don't go with a firm that will cover all the vehicles for you. You can save money by opening a stockbroker account for your stocks and bonds, opening an account on CMC Markets for your Forex options trading and so on. This might be a bit of a hassle but you will save a lot of money especially if you look at it from a long-term perspective.

Separate Your Emotions

A good lesson to keep reminding yourself is that investments and emotions are a bad pair. Remember, the markets are largely run by two emotions: greed and fear. Losing investors are the ones who keep going through the cycle of fear to greed and greed to fear. Every time they switch emotional bias, the markets start to go to the opposite direction. Remember, you are in for the long-term and timing the markets is not a game that should interest you.

The Power of Compounding and Dividends

Compounding and dividends will create wonders for your investment money. For example, if you started with $10,000 and invested in S&P 500 index (price-only return) in 1970, that money would have grown to around $200,000 by now. However, if you start reinvesting dividends and allow them to compound, the same $10,000 would now be worth around $900,000. That's a huge difference. Hence, start your nest egg today and stay on course.

Adjust Your Life Expectancy Estimates

Most investment plans are designed to provide you with a cash flow from the moment you retire to the time you die. These days, most people assume that the life expectancy is around 70 years and thus investment retirement plans are designed to carry you until such age. However, you could be missing something.

According to statistics, humans are living longer. In fact, if you reach 65 years old, there is a 50% chance that you will reach 90. In other words, you should adjust your retirement investment plan so you'll never run out of money during your retirement years.
Long-term investment is by far the safest way of achieving financial freedom. Furthermore, it's a fairly simple endeavor but it takes a lot of discipline and consistency. You can make things easier by following the tips we mentioned above.

Image Credits: https://pixabay.com/en/chart-graph- finance-financial- data-2785932/ & 
https://pixabay.com/en/money-coins- finance-currency- 2696219/
Like the Post? Do share with your Friends.


Post a Comment

Have a thought? Please leave a comment here, and I will return as soon as possible. Thanks - If you have a minute, why not check-out the sibbling of Self Sagacity.com Blogger Broadcast. Extra Links = Spam = Delete.