If you are thinking about investing in the stock market, then you have made the right decision. Though the stock market is subjective of profits, a well-defined strategy can fetch you decent gains. Many investors confuse trading with investing. If you are willing to invest for a short period of time that is 1-2 years, it is called trading. But, if you are willing to invest in stocks for a long term (more than 5-10 years or more), it is called investing.
Fundamentals of Long Term Investing
As successful global investor Warren Buffet says, “Only buy something that you’d be perfectly happy to hold if the market shuts down for 10 years.” So now you know the reason behind the infinite wealth secret of Warren Buffet and successful investors like Peter Lynch, George Soros, and many more. There is one thing common between all these investors is there is always room for a long-term portfolio to achieve goals. And if you are on the path to be one of the successful investor, here is how you can do:
First, you need to invest in good-quality stocks.
This is where most investors fail in the first step. Investors often invest in poor quality stocks and so the chances of making money gets limited. Reports suggest that nearly 95% of stocks do not yield consistent money, returns for investors over the long term. So, you must be careful about selecting the right stocks for your long term portfolio. Here are our stock recommendations for 2021 which will yield good results for long-term investment.
Second, you need to hold on to your investments for a long time.
Once you have invested in the stocks, the next and most significant step is to hold on to your investment for a really long time. No matter what market rumours are, you need to stick with these stocks. For example, you have invested in ITC stocks and suddenly, the share price starts falling. You need not withdraw your investment. You have to accept the fact that not every time a company’s share will grow.
So, you have to analyse the fundamentals of the company stock that you are investing in and once you have done that, you have to hold on to it.
Investing is all about focusing on your financial goals to achieve your financial freedom. So, if you want to enjoy the fruits of investment, you have to plant the seed today and wait for it to give the benefits after a certain period of time (years). Regardless of any market news, you have to sit back and hold tight, and in some cases totally forget about the stock market investment till the time of maturity.
So do your research/analysis before investment, invest your money carefully, and sit back and relax to enjoy the benefits of long-term investing.