“Investing” is a vague term that gets thrown around quite a bit, but how many of us truly understand what it means to invest? Much like saving for retirement, investing is largely built around saving money for the future. Unless you have the capital to invest (or lose) in the up-and-down nature of the stock market, you aren’t in it for the big win.
Investing is trying to make your money work towards your future. Use the money you make now to build over time and turn into a significant amount down the road when retirement or large expenditures come into play. There is great advice for investing in the stock market in the book Stocks for the Long Run. Colorado Capital Management, trusted financial advisors, highly recommend this read for investing long term in the stock market.
But if you need a bit more, these are investment strategies that can be beneficial over the long term.
Don’t Let Your Emotions Clash with Your Objectives
Having an open mind when investing is one of the biggest keys. Limiting yourself to a certain sector can keep you from experiencing huge growth while participating with something else. The more open-minded you are regarding your thinking about investments, the more likely you are to find yourself investing in something that starts out as undervalued but experiences growth.
Those financial objectives that you have – saving for retirement, buying a home, etc. – should be what you are constantly eyeing. If you don’t think about those objectives first and foremost, you will find yourself limiting your overall growth.
There’s an old saying that putting all of your eggs in one basket is never a good idea. This is never more true than it is when investing. If you put all of your money in one single investment, you run the risk of that investment tanking and then all of your money is gone.
When you diversify your portfolio – finding a somewhat even mix between stocks, bonds, and real estate – you insulate yourself from catastrophic failure. While diversifying certainly can’t protect you against loss, it keeps you in the game with the ability to turn things around if one aspect of your portfolio goes horribly awry.
Profits and losses are common in investing and not getting too shortsighted with your investments is important to keeping you in the game longer.
Letting your contributions fluctuate on a regular basis is a recipe for crashing and burning. Stay consistent and you will likely see at least a small gains over a long period of time. Investing is a marathon, not a sprint.