10 Tips for Successful Long-Term Investing

Posted on by WealthDesk
10 Tips for Successful Long-Term Investing

Warren Buffet is known to have said, ‘Successful investing takes time, discipline and patience. You can’t produce a baby in one month by getting nine women pregnant. So, to become a successful investor, you need time on your side. 

Long term investing can help you amass a considerable corpus for your long-term goals through compounding returns. This helps in wealth creation which, in turn, enables you to fulfill your financial goals. So, think long-term when you start your investment journey. 

Now that you know why long term investment is good, here are 10 tips that you can follow for becoming a successful long-term investor:

10 Long Term Investment Tips 

  1. Match investments to your goals
  2. Don’t procrastinate
  3. Be disciplined
  4. Invest what you can afford
  5. Pick an investment strategy
  6. Invest in equity
  7. Diversify your portfolio
  8. Step up your investments
  9. Keep inflation in mind
  10. Review your portfolio regularly

Let’s discuss each of these tips in detail.

1. Matching investments to goals

The first thing you need to do is identify your goals. After all, you need a destination before you start your journey!

List down your goals and their time horizon, and then assess the investment avenues that would help you meet each goal. Create an earmarked investment for each goal so that every goal is accounted for.

2. Not procrastinating 

Start early if you want a shot at long-term investment. For compounding to work wonders on your investments, you need to give it time, and you can only afford that when you start investing from an early age. So, don’t delay your investments. Start ASAP!

3. Being disciplined

Discipline is a key factor in long-term investment. Many times investors lose sight of their long-term goals and invest haphazardly. This hampers the investment and the return-earning potential of your portfolio. So, be a disciplined investor. Choose the best SIP for long-term investment and invest every month in a disciplined manner. 

4. Affordable investing

This is another golden rule. Always invest what you can afford. Since you have a long-term vision, you should be able to set aside a part of your income towards investments regularly. So, figure out your disposable income and the amount that you can comfortably invest every month.

5. Picking an investment strategy

Every investor has a different investment strategy. You, therefore, need to find out what strategy works for you and use that. Try to stick to the chosen strategy, as changing your plan often might not give you the expected returns. 

6. Equity investing

Though risky, equity is a good long-term investment. Even if you are risk-averse, long-term equity investments prove profitable as the risk is smoothened out with time. Take the Indian stock market, for instance. In the last 10 years, i.e., from March 2011 to March 2021, BSE has more than doubled from 19,445 to 49,509 and has delivered a CAGR of 10%. So, with a long-term investment strategy in stocks, you can grow your portfolio considerably. 

Equity investing can be done through WealthDesk in a simplified manner. You can also choose WealthBaskets for a long term investments in the stock market. 

7. Portfolio diversification

While equity is a profitable avenue, portfolio diversification is equally important. As the popular saying goes, don’t put all your eggs in one basket. Explore the best long term investment options and create a diversified portfolio.

8. Stepping up investments

Try increasing your investments with time. Ideally, you should increase your investments by 5% to 10% every year so that you can invest more and create a sizable corpus. When you are young, your income might limit your capacity to save. However, as your income increases, increase your investments too.

9. Accounting for inflation

Inflation is relevant when saving for the long term. As inflation causes an increase in the price of goods and services, your goals need a higher corpus for fulfillment. As such, you need to factor in the inflationary trend when calculating the corpus required for your goals. You can opt for long term equity investments and/or increase your investments to build an optimal corpus that is inflation-proof.

10. Portfolio review

Lastly, reviewing your portfolio periodically is also important. With changing times, your goals might change or need a higher corpus. Similarly, you need to give up non-performing investments and invest in better options for maximum returns. So, review and shuffle your portfolio every year to ensure that your financial planning is on track. 

These tips work wonders if combined with long-term investment to create a good corpus for your goals. So, incorporate these tips into your investment habits and watch your portfolio grow with time. With WealthBaskets, investors can invest in a basket of premium ETFs and stocks for the long term. The WealthBaskets are created and managed by leading SEBI registered advisors based on some idea, theme or sector.

FAQs

Which is the best long-term investment option?

Equity can be one of the best long-term investment options. This is because it gives attractive returns and can help in wealth creation. Moreover, the risk is also reduced in long-term investments, and you can create a sizable corpus. You can invest in equity stocks, mutual funds, ETFs, and other equity-linked avenues when you choose equity.

How to become a successful long-term investor?

You should follow the aforementioned tips to become a successful long-term investor. Incorporate all the 10 tips so that you can avoid common investing mistakes and create a good corpus for your financial goals. 

Which 10-year investment options are the best?

If you have a 10-year investment horizon, you can invest in various long-term investment plans like equity stocks, mutual funds, ETFs, fixed deposits, National Saving Certificates, bonds, etc., to get good returns. While long-term investment in stock and market-linked avenues would give good returns, FDs and NSC offer stability against market risks.

Why is long-term investment a better choice?

A long-term investment is a better choice because of two factors: compounding of returns and affordable savings. With a long-term tenure, compound interest yields exponential returns. Moreover, you can save small amounts regularly to create a sizable corpus over time. You can also adjust your investing style when you have time on your hands. 

What are safe investments with high returns?

Safe investments are those which offer guaranteed returns and are immune to volatility risks. They have a fixed rate of return payable over the chosen tenure. Some options include fixed deposits, PPF, National Saving Certificates, recurring deposits, post-office deposits, etc.