Successful investors invest for the long-term, rather than depending on hot tips or risking their nest egg on get-rich-quick schemes. You can be a successful long-term investor, too, and enjoy the returns as your investments grow exponentially when you give them years or even decades to mature. Here are four ways to invest your money with a long-term perspective.
The first and most important place to start is to create a diversified portfolio. This gives you the benefit of being in a lot of different categories at the same time. Make sure that you are properly diversified — include stocks, bonds and even index funds on blue chip and smaller companies spread across different geographical regions. You can work with a financial advisor like Ringgit Advisor to create a diversified portfolio that suits your risk appetite.
2. Save For Retirement
The biggest long-term goal for most folks is saving for retirement. Starting retirement saving early can reap the benefits of compounding interest. The earlier you start, the harder your money can work for you, the earlier you can retire.
Based on your risk appetite, there are many retirement planning alternatives that offer higher returns than the bank. To find out which type of retirement plan is the best fit for you, you can talk to a trusted financial advisor about suits your current lifestyle and long-term goals.
Find out how much you need to retire comfortably and how much to boost your retirement fund by signing up for our newsletter and downloading our retirement calculator here.
3. Choose the right level of risk
Your level of risk will determine the type of investments you choose. You most likely can afford to take more risks if you are in your 20s than say, someone in their 50s. It also depends on whether you are a conservative or aggressive investor by nature.
No matter your risk level, know that investing requires nerves of steel. The stock market can fluctuate erratically and there’s always news of impending gloom and doom to scare away faint-hearted investors.
Instead of focusing on everything that can go wrong in the stock market, which is out of your control anyway, dwell on what is within your power. These variables include fees, taxes, your behaviour and risk profile.
4. Invest and save regularly
You may invest in a well-performing stock or unit trust fund but if you don’t invest enough in it regularly, you won’t accumulate great wealth at the end of the day.
It’s crucial to save as much as you can on a regular basis. Automate your savings by setting aside a regular sum of money every month. If you don’t see the money, you won’t be able to spend it on frivolous things.