Long term investment strategy 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 Strategy
- 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.
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.