Fortune favours the prepared. Investing for the long term is a lifestyle choice that can provide individuals and families with financial security and peace of mind.
It requires discipline, patience and a commitment to planning and executing a long-term investment strategy. With turmoil apparent in the global political scene, market volatility is inevitable. We understand these factors might serve as inertia to commit to long-term investing.
However, it is especially important to persevere and follow through in these trying times to maximise returns. To drive this message home, let us share the benefits of investing for the long term and provide tips on how to develop a successful long-term investment plan.
Benefits of investing for the long term
Investing for the long term provides several benefits that make it an attractive option for those seeking financial security. The most significant advantage is the potential for compounding returns. Compounding is the process of earning returns on your initial investment and the returns earned in previous years. This can lead to exponential growth over time, a powerful way to build wealth.
Another benefit of investing for the long term is that it can help individuals to weather market volatility. Short-term fluctuations in the stock market can cause panic and lead to impulsive decisions based on raw emotions, such as selling stocks at a loss. However, by investing for the long term, individuals can ride out market downturns and benefit from the eventual recovery.
Finally, investing for the long term can help individuals to achieve their financial goals and aspirations. Whether saving for retirement, buying a home, or paying for a child’s education, a long-term investment strategy can provide the necessary funds to achieve these objectives.
Developing a successful plan
Developing a successful long-term investment plan requires discipline, patience and a commitment to planning. Here are some tips to help you get started:
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• Set clear financial goals: The first step in developing a successful long-term investment plan is to set clear financial goals. This involves identifying what you want to achieve with your investments and how much you need to save to reach these goals.
• Diversify your investments: Diversification spreads your investments across different asset classes, such as stocks, bonds, and real estate. This can help to minimise risk and maximise returns over the long term.
• Invest regularly: The seemingly impossible task of resisting the temptation to spend on ‘wants’ instead of investing regularly can be eliminated with the rise of automation. Automatic investment tools such as Robo Advisory remove the emotional factor and ensure regularity in building wealth over time. Regular investments also provide the benefit of dollar-cost averaging, which involves buying more shares when prices are low and fewer shares when prices are high.
• Monitor and adjust your portfolio: It is important to monitor your investments and adjust your portfolio as needed regularly. This involves reviewing your asset allocation, rebalancing your portfolio, and making changes based on market conditions. With the accelerated pace of life, many might find it challenging to monitor and adjust their portfolios constantly. Why live with that constant worry when you can simply leave it to professionals to manage your investments?
• Seek professional advice: We recognise that management of investment portfolios may be daunting. Therefore, we highly encourage all investors to consider seeking the advice of a financial advisor. A professional can help you develop a longterm investment plan tailored to your unique financial situation and goals.
PhillipCapital can help
Investing for the long term is a lifestyle choice that can provide individuals with financial security and peace of mind. By developing a disciplined, patient, and well-planned long-term investment strategy, individuals can benefit from the power of compounding returns, weather market volatility, and achieve their financial goals. If you are looking for a simple and automated way to invest longterm, consider opening a Robo account with SMART Portfolio, offered by PhillipCapital’s POEMS platform. SMART Portfolio offers professionally managed portfolio services, utilising Cyborg Methodology. With fees starting from as low as 0.5% per annum with a minimum investment amount of SGD 300, they make it easy for you to grow your wealth.
Whether you’re a seasoned investor or new to the game, you can gain access to a sophisticated investment solution that can help you grow your wealth over time. To learn more about SMART Portfolio from PhillipCapital’s POEMS, you may refer to https://smart.poems.com.sg/ to find out more.
Loo Chenkai is a digital marketing executive with the customer experience unit at Phillip Securities
