Long-term investing can help people maximise the growth potential of their money by enabling them to ride the ups and downs of the stock market. This approach contrasts with short-term investing, which focuses on quick gains or market fluctuations. カヴァン・チョクシ says that long-term investing is much like test cricket. Both of them require patience, discipline, perseverance, and planning.
カヴァン・チョクシ marks a few long-term investments to add to the portfolio
Investing over the long term is among the best ways to secure the financial future. Even though it is tempting to trade in and out of the market, going for a long-term approach is a well-tested strategy that many investors can benefit from. Here are a few long-term investments to consider for the portfolio:
- Growth stocks: Such stocks typically promise of high growth and investment returns. While growth stocks often belong to tech companies, several other industries can also offer such stocks. They typically reinvest most of their earnings back into the company, seldom distributing dividends, especially while experiencing rapid growth. Analysing individual growth stocks requires thorough scrutiny, which can be time-consuming. Given the volatility associated with growth stocks, it is prudent to have a high tolerance for risk or commit to holding onto the stocks for a minimum of three to five years. Some of the biggest companies in the world have been high-growth companies. Hence, one can enjoy high rewards, as long as they select the right company to invest in.
- Stock funds: Stock funds comprise of a collection of stocks, which are typically unified by a specific theme or categorization, like large stocks or American stocks. While the fund company may charge a fee for this product, these expenses are fairly low. Investors who do not want to spend time and effort in analysing individuals should especially consider investing in a stock fund like an ETF or a mutual fund. A stock fund is less risky than buying individual positions and requires less work. If one chooses to purchase a broadly diversified fund, like an S&P 500 index fund or a Nasdaq-100 index fund, they may get many high-growth stocks.
- Dividend stocks: These stocks are usually able to achieve solid returns but they are also unlikely to speed higher as fast as growth stocks. A dividend stock refers to a company that distributes regular cash payments known as dividends to its shareholders. This type of stock is commonly associated with older and more established companies that have lower capital requirements. Dividend stocks are favoured by older investors as they provide a steady income stream. The best dividend stocks not only offer regular payouts but tend to increase their dividend payments over time, providing the potential for higher earnings compared to fixed-income investments like bonds. Real estate investment trusts (REITs) are a popular category of dividend stocks. Such companies invest in real estate properties and distribute a significant portion of their income to shareholders in the form of dividends.
カヴァン・チョクシ points out that long-term investing helps mitigate short-term market volatility. By choosing to stay invested through market fluctuations, investors can smooth out the impact of downturns and benefit from overall market growth.
