3 Long-Term Investments You’ll Thank Yourself for Later, With the world of investing seeming more complicated than ever these days, it’s harder to figure out which investments are worthwhile and which will leave you scratching your head as you wonder why you ever got involved in the first place.
The three short-term investments below fall into that latter category; avoid them at all costs! However, there are plenty of long-term investments that will pay dividends in the years to come, and those are the ones we’ll cover here. Here are three short-term investments you’ll thank yourself for later, and three long-term investments you’ll thank yourself for later as well!
Invest in Self
Investing in yourself can help you succeed professionally, but it’s also a crucial part of professional development. From investing in your brain to investing in your health, here are some investments that can yield huge benefits—both short and long term. Think about both when setting goals. Try These Tips:
Research and Understand Different Types of Investments When entering any industry, it pays to understand how others within said industry go about doing things; knowing which techniques have worked for other people (and not necessarily knowing why) can give you insights into what types of strategies have been successful for certain people who may have more experience than you do. This can lead to actionable opportunities. In finance, there are two main approaches to investing: active and passive.
The former is where individuals or firms try to beat or match market indexes such as S&P 500 by attempting to outperform their peers; index funds and ETFs fit into passive investments. In either case, familiarizing yourself with terms will give you insight into where companies stand concerning each other.
Here are a few key phrases and words to know: Value vs. Growth If looking at industries rather than individual stocks, value and growth labels can be applied. Value is typically placed on stocks that trade at lower prices relative to their intrinsic value while growth refers to those trading higher relative to perceived potential value. Companies falling under value include IBM or Intel while Amazon or Netflix fall under growth labels.
Invest on Others
The best way to become a better investor is to become a savvier investor. The more you know, the smarter investing decisions you’ll likely make. Here are some great ways to learn from experienced investors:
1) Visit and hang out at investment clubs. These clubs give members a chance to test their trading ideas and seek help from experienced people who can offer guidance on stocks and trades.
2) Go with somebody else’s research. Most financial companies like TD Ameritrade have a group of analysts whose sole job is to crunch all kinds of data about companies to determine whether they’re worthy investments or not; these reports (which are free ) can be excellent resources if you want to get up to speed quickly on different sectors or industries that interest you.
3) Read—and reread—Warren Buffett’s annual letters to shareholders. Yes, he’s an inspiration—but he also has decades of knowledge that could be useful as you strive to build your empire.
4) Find a mentor. Even if they’re just starting themselves, these folks may be able to provide valuable insight into how much time should go into your portfolio versus other areas (like operations). Try LinkedIn as an initial resource – but don’t stop there! When approaching a potential mentor, you need to be professional.
Your success depends on your ability to work well with others and create meaningful connections. So although emailing someone cold might seem efficient, it’s almost always going to come across as unprofessional and off-putting. Instead, take note of what executives in your industry are doing right and reach out directly via email or social media to ask them if they’d meet over coffee sometime.
Invest on Index Funds
Investing in index funds is one of the smartest moves you can make if you’re looking to minimize risk and become a savvier investor. The S&P 500 has enjoyed an annualized return of 9.8% over more than a century, according to LPL Financial data, while Vanguard’s Total Stock Market Index fund (VTSMX) has returned 10.1% per year during that same period. Plus, it doesn’t get much simpler: Instead of having to dig through hundreds of stocks trying to find quality investments, index funds allow investors to benefit from owning hundreds of companies simultaneously.
There are no shortcuts or workarounds with index investing; it’s just a smarter way to invest your money. What else do you need? If index funds are too passive for your liking, try ETFs—Exchange Traded Funds—instead. ETFs behave similarly to index funds but trade like stocks and can be bought or sold at any point throughout the day. Because ETFs have such low fees compared to mutual funds, they tend to outperform their investment counterparts by almost 3%.
Again, using these funds lets you take advantage of economies of scale and diversification with very little hassle. Throw out your actively managed mutual funds when possible; stick to simple index investing. You won’t regret it. The Best Way to Become a Better Investor Is to Become a Savvier Investor:
One of the best ways to create sustainable wealth over time is through effective investing. But before you even consider diving into stocks, it pays off big time in terms of long-term success if you learn how markets work before putting your capital on the line. Before researching individual stocks or bonds, there are a few things you should know about how markets function so that you don’t set yourself up for failure right off the bat. Even seasoned professionals might want to brush up on basic financial knowledge:
After all, as legendary investor Peter Lynch once said, If you aren’t sure whether or not you understand how something works, then you probably don’t understand it. And if you don’t understand something fundamental about our economy … then sooner or later, maybe in 20 years…you will come across something that shows you why what seemed important yesterday isn’t what matters today.