Long-term investing: How to nail it?

September 28, 2022 05:47 PM AEST | By Kelvin C (Guest)
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Investing should be in essence the same at every given time, but investing the same way each time may cost you. That's why learning the right strategies are vital. Long-term investing strategies differ greatly from other strategies. In this article, you can find different strategies that you can use to strengthen your knowledge, and arm yourself for the future.

There are many sites posting good educational videos online explaining the difference between trading and investing, such as Fxexplained.co.uk.

Buying and holding a stock

The common belief that buying and holding guarantees make you rich, is not fully correct. However, there is some truth in it. As mankind evolves and develops, technology and other sectors also get modernised. As per one pool of thoughts, it may make sense to just buy a stock and hold it for a certain amount of time expecting it to grow. 

However, doing this way can be a bit risky because you put everything in one company. Something that is considered smarter is an index fund like the S&P 500. The S&P 500 is an index fund of the top 500 companies in the US, such as Microsoft, Tesla, Apple, and others. Some believe that holding investments in these companies is smarter in terms of risk management since an index fund is a collection of a bunch of individual stocks. So, when one is in the red the other one might balance out the loss. The named index fund “The S&P 500” nets about 11% A.P.Y. 

Bonds and peer-to-peer lending 

Most people like security. This is where bonds come in, government bonds for that matter. Bonds are a type of investment we call a debt infrastructure since you are basically lending out money to the government to build new things or develop new projects and you get paid back your full amount invested plus the interest. However, the interest you get back is small, between 4 - 6% APY, which is nothing compared to the stock market that averages around 11% return.

If you want to take more risk, then you could look into peer-to-peer lending. This is you lending out to people who can’t take a loan at the bank or don’t want to. So, you lend out your money through a platform, and like bonds, you get your amount back plus a set interest. 



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