When it comes to securing a comfortable financial future, long-term investments are by far one of the best strategies you can adopt to achieve your goals. Whether you’re new to investing or you’ve been building your portfolio for years, Flagship Investments can help you stay on track. Follow our top five tips for long-term financial success and learn how to master the investment game today.
Why Invest in Long-Term Strategies?
Investing long term in Australia not only offers sustainability but also efficiency and affordability, crucial for securing a robust financial future.
Long-term strategies give your portfolio the opportunity to grow more over time while also protecting your funds from any short-term market volatility. Unlike short-term strategies such as day trading, long-term strategies also require fewer costs and less effort when it comes to buying and selling your assets and monitoring their progress.
1. Stick to Your Plan
The best long-term investments are the ones that follow a consistent plan. Once you’ve established your long-term investing goals, it’s vital to choose an investment strategy that aligns with these goals and adhere to it, ensuring consistency in your long-term investment strategies. Wavering from your chosen strategy could lead to risky, off-the-cuff decisions that can have a negative impact on your portfolio.
If you start to see a downward trend in the market, it can be tempting to sell your stocks and cut your losses. However, the beauty of long-term investing is it gives you the opportunity to ride out these downward trends rather than you having to sell and lock in the loss.
2. Diversify Your Portfolio
Long-term share investing, including stocks, real estate, and bonds, can significantly maximise your returns, building a robust portfolio. While investing in one asset with a solid performance history can seem less risky than putting your faith in multiple different investments at once, the opposite is actually true.
The future is unpredictable, and every investment market has the potential to underperform, even if it has done well in the past. Spreading your funds across multiple different sectors and diversifying your portfolio can reduce the impacts of market volatility and protect your finances should one market not perform as expected.
To learn more, check out our top five tips on how to add diversity to your portfolio.
3. Don’t Get Caught Up in Trends
Sometimes, certain companies or investment strategies will skyrocket into success, whipping people up into a frenzy and prompting them to buy into the craze as fast as possible.
The problem here is that nine times out of ten, these rapid successes are exactly that — rapid. More often than not, they’re over as quickly as they began, and people find they have paid top dollar for shares in a depreciating asset.
When it comes to long-term investing, the stocks, assets, and funds that are most likely to serve you are the “boring” ones with low-risk strategies and steady growth. While this may not seem as exciting right now, you’ll likely thank yourself in the future for not getting caught up in fleeting trends.
4. Reassess Your Portfolio Every So Often
This step may seem counterintuitive once you’ve committed to your investment strategy and have found stocks and assets that best match your financial goals. However, it’s still important to check in on their performance every so often to ensure the investments you made initially are still on target.
While it’s important not to get swept up in trends, it’s also important to know when your investments are no longer on track to serve you in the long term. Share investing can be unpredictable, mutual funds may change strategies and no longer align with your goals, and companies can change hands and cease to be the safe investment they once were.
There’s no problem with getting rid of any investments that don’t serve you anymore and reinvesting the money into assets that are more in line with your financial goals. A yearly portfolio review can help you stay on track to meet your financial goals on time.
5. Invest in Managed Investment Schemes
A managed investment scheme can give you access to an expertly crafted portfolio that aligns with your financial goals. These schemes can come in a number of different forms, but the most popular ones are the following:
- Mutual funds
- Listed investment companies
- Property schemes and REITs
- Exchange-traded funds
When you invest in a scheme that is actively managed, you’ll have the benefit of your fund manager implementing all four of our previous tips on your behalf. These fund managers are capable of making the most informed decisions for your long-term investments, giving you true peace of mind and strengthening your financial future.
What is Long-Term Investing
Long-term investing involves strategies designed to achieve gains over an extended period, typically beyond five years. This approach focuses on compounding returns and riding out market volatility to realise potential growth.
Long-term investing in Australia offers the advantage of compound growth, tax efficiencies, and the potential to weather short-term market fluctuations.
New investors should focus on setting clear financial goals, consulting with financial advisors, and starting with diversified, lower-risk investments.
