When it comes to financial investments, there are all kinds of different strategies out there. However, rather than picking a general strategy (and you will find plenty of these), it is first important to decide what sort of investment interests you. This is important because, for example, someone looking for short-term gains should invest differently than someone looking for long-term stability. Certain investment opportunities and strategies can be more or less fitting for different people with different financial priorities. With that in mind, here are 5 tips for long-term investors.
1. Have An Exit Strategy
Long-term investors are often tempted to commit to their investments based on a time limit, rather than sound investment strategy. To some extent, this comes with the territory – after all, what is long-term investment without allowing time for gains? However, it is important in any investment to develop an exit strategy – generally, a minimum price of stock. If an investment drops to that limit, it is often best to get out while you can and cut your losses.
2. Don’t Sweat The Small Stuff
On the other hand, it is also important in any long-term investment not to panic over short, immediate losses. Naturally, stocks and other sources of investment can be quite volatile, and the point of a long-term investment is to ignore the short ups and downs in hope of eventual, significant gain. Sticking to a strategy means stomaching occasional short losses, provided you still set your lower limit exit strategy.
3. Consider Slower Investments
There are certain investment opportunities that move more slowly than your average stock option. For example, consider something like purchasing gold bullion at a site like BullionVault. Gold’s price tends to move relatively slowly, without experiencing sudden or dramatic shifts in value. But, if you are planning on giving your investments considerable time to grow, this might be a great opportunity to look toward. You can leave a gold investment alone for a very long time without significant risk of loss, and hope for gradual gains over time.
4. Look Forward, Not Backward
As with any investment, the important thing is to determine if a stock can continue to make money, rather than to observe if it has made money in the past. In early 2013, Apple is a prime example – the company has a wonderful name and reputation, but despite past successes the stock is struggling mightily. Some may have predicted this struggle with the passing of visionary CEO Steve Jobs last year, but those who invest on past success may have been hurt.
5. Don’t Ignore Short-Term Gains
Finally, just because you are investing with long-term goals, do not ignore short term gains. It can be tempting to stay in indefinitely while an investment is earning returns, but at some point short-term gains should simply be collected upon. This is a personal judgment call, but it is important to at least stay open to cashing in on an investment sooner than intended.
This is a guest post by freelancer Brad Morris, on behalf of BullionVault.