Before making any long-run investment decisions, consider these best long-term investment strategies.
When you’re in your 20s or 30s, long-term investment (20, 30 or 40 years) can be a difficult concept to wrap your head around. Not sure where to invest for the long run? We get it — saving and investing for the benefit of an impossible-to-imagine older version of yourself is a giant mental hurdle. Humans are wired to prioritize immediate wants and needs over those that are decades away, so in some ways, long-term investing goes against instinct.
But logic dictates you need to invest for the long run if you ever want to retire, plan to pay for your child’s post-secondary education or hope to meet any other far-off financial goal.
To help you stay on track and keep your eye on the prize, we’ve put together this round-up of the best tips and tricks for successful long-term investing.
Create a Balanced Portfolio
One of the best ways to ensure your investments provide solid returns over time is to have a well-diversified mix of stocks and bonds in your portfolio. By putting your money into a broad array of assets and industry sectors, you can be sure that at least some of your holdings will earn good returns at any given time even if others aren’t performing well.
Think about it this way: if you put all your money into real estate in one neighbourhood and then something unexpected happens that pushes home prices down in that neighbourhood — say, a sharp increase in local crime — you’ll lose your shirt. If you had invested in real estate in a bunch of different places, sure you’d lose some money in the affected area, but you’d likely still have gains in others. The same is true for all kinds of investments, so you want to diversify by region, size, type and sector.