As the saying goes, “slow and steady wins the race.” Profitable investing does not involve convenience. In fact, it is anything but a short game. Many individuals get lost in the idea that if they don’t see a quick return on their investment, they are playing the game wrong. But the fact is, investing is a game that requires significant concentration and perseverance, responding with aptitude through every twist and turn of the journey.
As much as investing is about allocating your wealth to beneficial sources, it is also about harnessing a character trait that will allow you to not only have faith throughout the process; but in the long run of your investment journey. That trait? Patience.
While holding patience, it is equally important to understand your investment capacity. Long-term investing looks differently for everyone and understanding capacity boils down to three important concepts:
- Financial Goals: Where would you like to be in ten, twenty or even forty years? How do you want your retirement to look? How much money do you want to leave for your children? These kinds of questions become compasses in your long-term investment journey.
- Risk tolerance: In essence, risk tolerance is about how much flexibility you have in market fluctuations, and how much loss you can financially handle. Low-risk tolerance means more conservative investments, while higher risk allows you to make more aggressive investments.
- Time horizon: How much time do you have available to you? Long-term investments are defined as something that takes more than six years, but do you have the luxury of more time? Can it be stretched to ten or even twenty?
While the idea of letting your investment sit for at least ten years may be daunting, especially when you consider higher-risk investments that hold higher risk. What keeps everything anchored, is the idea that you have trust in the future. That means sticking it out through all the ebbs and flows to boost the resilience of your investment.
Finding a balance between risk and growth is vital to ensuring your long-term investment stamina. While one stock can grow quickly, it may pose a higher risk, but that does not mean you stay away from risk entirely. It is about weighing the risks and the rewards for your personal financial status and understanding what balance works for you and your wealth.
Wondering where playing the long game in investing can be most advantageous? Here are some investment options that honour your commitment to patience by giving you the reward of returned investment.
Real Estate
According to Forbes, “Real estate is one of the safest investments you can make.” Owning a property is both a good investment and a tangible one.
In addition to lowering your taxable income, real estate investments, over time, can provide continued cash flow which can be reinvested into your property by paying off your mortgage. There are multiple forms of appreciation for real estate as well, not only does it grow with the market and inflation, but any updates that you make to your property can increase the value of your investment.
Stocks
It is advised against making a short-term investment in a stock due to its tendency to plummet and skyrocket. While this defers the individuals who seek a quick reward, stocks are optimal for investors who are keen on the long game.
Some common long-term stocks that are beneficial to be invested in include:
- Dividend Stocks: With a rich history of handling the ups and downs of the markets, dividend stocks are a great option for long-term investors due to their slow growth and solid returns.
- Exchange Traded Funds (ETFs): ETFs offer you the chance to invest in various stocks boosting your portfolio diversification. By investing in stocks with a smaller price while having a far-reaching time horizon, you can not only spend less but potentially gain more.
While these are only a few of the many long-term investment opportunities available to you, each one of them holds distinct advantages and disadvantages. That is why it is vital to diversify your portfolio and support the long game by holding multiple investments. While one falls, another may climb.
Like the short-term investors, the hare found significant returns, quickly. While it was fine while it lasted, the tortoise famously came out victorious. Short-term investments do offer benefits of their own, but they lack one very important thing, endurance.
When it comes to long-term investing, the longer you play, the higher the reward. Want to learn how you can play the long game? Speak with an advisor at RaeLipskie today and begin your long-term journey the right way.
