When it comes to investing, we all have different goals and needs, and there is no one-size-fits all solution. As a successful long term investor, however, there some general principles that can help you achieve your unique objectives.
Here are some tips for the successful long term investor that can benefit your strategy:
Cash is rarely king
Many investors think of cash as a safe haven during times of volatility and market turmoil. As a successful long-term investor, however, you should avoid this often flawed thinking. Although savings accounts did earn somewhat healthy interest rates decades ago, nowadays their average interest rates are pittances compared to inflation. While your money might seem “safe” in a savings account, the truth is that its purchasing power is being continually eroded by inflation.
To become a successful long-term investor, you need to realize that parking your wealth in savings account might avoid ups and downs, but it will also cause you to sorely miss out on the opportunities available through long-term investing.
Volatility is normal
Many investors often default to panic mode when there is increased choppiness in the market. Although it’s impossible to predict volatility, major ups and downs are a fact of life most years rather than an exception.
To become a successful long-term investor, you need to avoid emotional reactivity when volatility inevitably happens. Instead of having a knee-jerk reaction, you can act rationally by keeping this fact in mind: historically, the stock market has always recovered and went on to reach a new all-time high, regardless of volatility.
Good things come to those who wait
Markets can always have a bad day, week, or even year. However, history suggests that a successful long term investor is increasingly less likely to see loses the longer they wait. In fact, over the last 66 years, a diversified portfolio of stocks and bonds hasn’t seen a negative return over a continual rolling period of 10 years. That’s why prudent investors will ride out the ups and downs of the market to achieve long-term success, rather than acting irrationally during times of turmoil.
Want to learn more about becoming a successful long term investor?
At LexION Capital, we help our clients achieve long-term investment success through bespoke investment solutions and personalized advice. If you’d like to learn more about how we can help you become a successful long term investor, reach out to us and start a conversation today.