Why investors benefit from long-term investing

August 1, 2018

We need to sincerely acknowledge the fantastic opportunity that investment time provides the investor. Most people have had lots of time within which to invest. At age 35 we cross over the halfway mark of the time remaining to invest; at age 45 approximately only one-third of our time is left! Many face a shrinking opportunity of time to have compound gains working for them, yet we must act while time remains.

When buying and selling stock investments, our emotional brain may lead us to make an erroneous decision. Some of the wealthiest investors do not actively trade once they buy a stock or investment fund (comprised of good stocks) after doing a careful assessment of the company’s sustainability of building capital, paying down debt and boosting gains with handsome dividends. With the help of an investment advisor, the selections of stocks can have a high potential to succeed in the market with a more stable growth history. Hence, they stay in the market and abide their time over the years. This simple long-term buy and hold strategy has made many millionaires over the last 30 years.

The key to making money in the stock market or via the use of funds is the time in, not the timing — it’s the patient, long-term period of wealth creation.

“Inactivity strikes us as intelligent behaviour” — Warren Buffett

Continually trying to time the market by buying and selling a stock or a fund usually backfires. The tax implications of capital gains can wreak havoc on a portfolio. Purchasing a stock or fund at a low price or using dollar cost averaging of a stock or fund purchase can work in the investor’s favour.

Greed and fear can work against investing

Without the assistance of an advisor or asset manager, the following can occur:

  • People can get caught up timing the market when influenced by either one of these two emotions: greed or fear.
  • Greed compels people to buy when the stock market (or a fund unit value comprised of stocks) is higher.
  • Conversely fear causes many to sell when the stock market’s value (and potentially a fund’s unit value) is lower.
  • Don’t just look at an investment fund’s most recent performance.
  • Make investment decisions with the help of a professional advisor who has access to investment managers.
  • Look for long-term investment performance over one, three, five and ten-year periods.

 

Publisher's Copyright & Legal Use Disclaimer

All articles are a legal copyright of Adviceon®Media.

The particulars contained herein were obtained from sources which we believe are reliable, but are not guaranteed by us and may be incomplete. This website is not deemed to be used as a solicitation in a jurisdiction where this representative is not registered. This content is not intended to provide specific personalized advice, including, without limitation, investment, insurance, financial, legal, accounting or tax advice; and any reference to facts and data provided are from various sources believed to be reliable, but we cannot guarantee they are complete or accurate; and it is intended primarily for Canadian residents only, and the information contained herein is subject to change without notice. References in this Web site to third party goods or services should not be regarded as an endorsement, offer or solicitation of these or any goods or services. Always consult an appropriate professional regarding your particular circumstances before making any financial decision.

Mutual Funds and/or Segregated Funds Disclaimer

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investment funds, including segregated fund investments. Please read the fund summary information folder prospectus before investing. Mutual Funds and/or Segregated Funds may not be guaranteed, their market value changes daily and past performance is not indicative of future results. The publisher does not guarantee the accuracy and will not be held liable in any way for any error, or omission, or any financial decision. Talk to your advisor before making any financial decision. A description of the key features of the applicable individual variable annuity contract or segregated fund is contained in the Information Folder. Any amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value. Product features are subject to change.