Long term investment is one of the most important things you could do for your future self. The long-term growth in investments such as stocks or mutual funds can be staggering, which is why it’s so crucial to start investing at the earliest.
Most people are not patient enough for long term investment. Long term investing can be boring at times as it lacks the adrenaline rush you get when you invest through day trading or invest in get-rich-quick schemes.
You need to understand that there is a huge difference between trading and long term investing is a time bound process as your financial assets grow strong and profitable over a long period of time.
This article will detail some reasons why long-term investing has proven to be profitable over time, and what you should consider when determining whether a long investment strategy suits your needs best.
What is long term investment?
Investing long term means you are investing in an asset with an intention of holding it for many years. There is a long-term horizon for long term investment.
The long term investment strategy can be profitable as long as one has the patience to wait for it to pay off. To invest for long term, you can choose any asset class whether it is a company stock or a mutual fund or gold etc.
But it is very important to see which asset class you choose after setting your financial goals and how do you put money across various financial instruments based on your life goals.
Why should you invest for long term?
An investor is somebody who commits money to an asset with the expectation of earning a return on that investment. As an investor you need to give enough time for a financial asset to grow and that is where long term investment strategy comes into play.
Benefit from Power of Compounding:
Investing long term is a wise decision for many reasons. One of the most important long-term investment reasons is the benefit of power of compounding you achieve in long term.
The long-term investment opportunities are endless with asset classes like mutual funds, especially if you’re willing to invest wisely and not just invest in random mutual funds schemes that are available to you.
The power of compounding is the eighth wonder of the world. It is the ability of an asset to generate earnings, which are then reinvested to generate their own earnings.
Over time, this can lead to exponential growth. This is one of the main reasons why long term investing is so important – because it allows you to take advantage of the power of compounding.
The power of compounding is the long-term effect of reinvesting earnings from an asset. The money you earn from long-term investing compounds over time, meaning as long as you continue to invest, your earnings will grow as a result.
In other words, your long-term investments will begin to take care of themselves.
Long term investment provides safety from market fluctuations:
Market fluctuations are an inevitable part of long term investment. In any given year, the stock market might go up or down. This can cause some investors to panic and their short term investment mentality pushes them to sell their assets, which often leads to losing money.
When it comes to long term investment, market fluctuations can cause an asset’s price to rise or fall dramatically. This is why long term investors need to be patient and stay the course, even when the market is volatile.
By investing for the long term, you’re giving yourself the opportunity to ride out these ups and downs and ultimately come out ahead.
Long term investors understand that these fluctuations are a normal part of the market and that they will eventually even out. They also understand that if they hold onto their assets for long enough, they will likely make a profit in the end.
This is why long term investing is such a powerful tool – because it allows you to weather the storms of the market and continue to grow your assets.
Long term investing is a long-term plan of buying and selling assets with the intention to generate income. In long term investment, market fluctuations can cause an asset’s price to rise or fall dramatically over long periods.
Also due to inflation there are good chances that your profits will get eroded away in real terms. To make long term investments profitable, long term investors select assets that they think will appreciate in value over the long-term.
Inflation beating returns:
Long term investment is also important because it has the power to beat inflation. This means that long term investors aren’t just making money from their investments–they’re earning a profit despite inflation.
For example, if inflation caused the price of a commodity to increase by 5% each year, long-term investors would be able to beat this inflation by making money with compound annual growth rate of say 12% from their investment even though inflation was increasing.
This is possible because long term investments are selected with the intention of riding out short-term market fluctuations. This allows investors to maintain their purchasing power long-term and ultimately beat inflation over long periods.
Best Long Term Investment strategy:
Now that we know the importance of long term investment, the next question is how to invest for the future. Below are few useful long term investment tips to make most out of your investment:
Know you time horizon:
Every person has different financial goals for lifetime and he or she has a fixed timeline to achieve those goals! That is why the time horizon for investing is an important consideration when making investment decisions.
This is the length of time you plan to hold your investment to achieve your financial goals. When deciding on your time horizon, you should consider your goals as well as the risk tolerance.
If you’re looking to achieve long-term goals, such as retirement, you’ll need to invest by considering the returns you will get after investing for 20-30 straight years and the expenses you will have at that time by accounting for the future inflation.
So, whatever your goal, be sure to consider your time horizon when making decisions about investing.
Stick with your investments:
One of the most important long-term success strategies is to minimize investment switching. For example, if you had an 8% long-term average annualized return and switched from one asset to another every year, your 8% long-term average annualized return would be replaced with something closer to say 6% when we consider the expenses you pay for redemption and other associated costs.
The lost 2% may not seem like much, but over many years it can add up to a loss of hundreds of thousands of rupees.
Review your investments regularly:
There are several reasons why you should review your investment. One reason is to make sure that you are still on track to reach your goals. Another reason is to see if there are any changes in your personal or financial situation that would require you to make changes to your investment plan.
You should also review your investment periodically to make sure that you are still getting the best possible returns.
Your long-term investments should be reviewed at least once every year. The best time to review your long term investment is either before or after tax season so that you can see how it affected your returns and financial situation.
It’s also important to consider the current economic conditions, especially if there are any changes in interest rates or inflation rates.
One of the best ways to invest for the long term is through mutual fund investments. Mutual funds offer a number of benefits that make them attractive for long term investors.
When you invest for the long term, you’re giving your money time to grow. This can be done by investing in through mutual funds and more specifically through Systematic Investment Plan (SIP) or Systematic Transfer Plan (STP), which usually provide higher return than other traditional investment options. Mutual funds allow you to spread your money out among a variety of different investments.
If you are interested in long term investment, please feel free to get in touch with at 8087678759 or 8999116127 or by writing to us at [email protected] or [email protected] by simply visiting the below link!