Patience may be a virtue, but when it comes to building your portfolio it's also an excellent investment strategy.
Your investment perspective with long term planning requires a well detailed plan of action plus the discipline to stay focused on keeping with the plan. In return, long-term investing will offer you distinct safety advantages.
Maybe you're wondering why?
Mainly, it's because you are focused on quality investments. In fact long-term investing tends to focus on quality investments that demonstrate a lengthy and solid financial track record featuring most of the following characteristic trends.
-Consistent dividend pay-out
-Steady revenue and earnings growth
-Consistent dividend pay-out
-Stable stock price appreciation
Focused management track record measured by solid annual return on equity
While past performance can never really predict future return, these high quality, long term investments tend to usually be market leaders within their industry and often are widely traded. They are well followed and tracked by by research analysts as well as the business media, and the value of their products or services is usually straightforward to understand and assess. The level of value of these quality investments isn't measured overnight, but over time. You're focused on diversification.
The longer-term investor will be watching for a diversity of investment opportunities that, taken together, will offer a combination of both upward growth and ideally, security. This naturally promotes asset diversification among different investment classes' equities, fixed income and cash equivalents. It also promotes diversity within each investment type, which can be important.
Diversity spreads risk within the portfolio and limits the potential for loss from any one investment by a substantial margin. Diversity over the long-term also means investors can seek out undervalued investments or growth opportunities that will be risk balanced by the strength of their core portfolio holdings.
You're avoiding market speculation The long-term investor avoids speculation on "hot tips" and trying to beat or time the market. A fully invested portfolio that is focused on long-term performance often saves investors from "taking a flyer" that could have major consequences. Speculation usually means lost time and money for most investors. A portfolio diminished by a series of speculative investments may never fully recover its asset value and reduce the portfolio's long-term return on investment.
You're taking advantage of the miracle of compound interest?
These are a series of financial trends that can work in the investors' favor when they take a long-term perspective. Compound interest is chief among them. An investor who builds a portfolio over time through a regular investment planning, contributions and reinvested dividends and capital gains (especially in the tax-deferred environment of the RRSP) can significantly increase a portfolio's investment value. The longer it's allowed to work, the higher the return. For example, a $25,000 initial investment supplemented with a $5,000 each year and compounding at an average of 6.5% annual return, will be worth $65,000 after five years, $119,000 after 10 years and $434,000 after 25 years of compounded growth.
A long-term investment plan that involves regular contributions takes full advantage of compounding and enables you to make money on the money you're saving for retirement. You're reducing your risk.
Strange as it may seem, the longer you remain invested in the market, the less risk you may face as an investor. In Canada, the S&P/TSX 300 has experienced its share of short-term volatility but for the long-term investors, the average 40-year annual rate of return has been 10.9%.
Investors with a short-term horizon who move in and out of the market are subject to the full forces of daily, monthly and yearly market volatility. Investors with a 10-year or more investment time frame can expect the periodic fluctuations in their portfolio's value will be smoothed out and the long-term upward momentum of the market will play a more dominant role in determining their investment returns. You're achieving peace of mind
Short-term investors must begin to literally micromanage their portfolios, most often in an attempt to market time their buying and selling in an effort to beat the market. A long-term perspective on portfolio management means not worrying about investment performance on a daily basis. The investments you've assembled in your portfolio are subject to review (quarterly or annually) to ensure they are performing according to plan and generating an overall return on invested capital that is what you expect. When necessary, buying and selling to re-balancing the portfolio and asset allocation decisions can be done methodically and not reactionary or in haste.
Your advantage as a long-term, higher quality investment approach comes from the knowledge that time is actually working on your side and working for you. Thane Fletcher can help you start an investment plan of action that puts time on your side.
Your investment perspective with long term planning requires a well detailed plan of action plus the discipline to stay focused on keeping with the plan. In return, long-term investing will offer you distinct safety advantages.
Maybe you're wondering why?
Mainly, it's because you are focused on quality investments. In fact long-term investing tends to focus on quality investments that demonstrate a lengthy and solid financial track record featuring most of the following characteristic trends.
-Consistent dividend pay-out
-Steady revenue and earnings growth
-Consistent dividend pay-out
-Stable stock price appreciation
Focused management track record measured by solid annual return on equity
While past performance can never really predict future return, these high quality, long term investments tend to usually be market leaders within their industry and often are widely traded. They are well followed and tracked by by research analysts as well as the business media, and the value of their products or services is usually straightforward to understand and assess. The level of value of these quality investments isn't measured overnight, but over time. You're focused on diversification.
The longer-term investor will be watching for a diversity of investment opportunities that, taken together, will offer a combination of both upward growth and ideally, security. This naturally promotes asset diversification among different investment classes' equities, fixed income and cash equivalents. It also promotes diversity within each investment type, which can be important.
Diversity spreads risk within the portfolio and limits the potential for loss from any one investment by a substantial margin. Diversity over the long-term also means investors can seek out undervalued investments or growth opportunities that will be risk balanced by the strength of their core portfolio holdings.
You're avoiding market speculation The long-term investor avoids speculation on "hot tips" and trying to beat or time the market. A fully invested portfolio that is focused on long-term performance often saves investors from "taking a flyer" that could have major consequences. Speculation usually means lost time and money for most investors. A portfolio diminished by a series of speculative investments may never fully recover its asset value and reduce the portfolio's long-term return on investment.
You're taking advantage of the miracle of compound interest?
These are a series of financial trends that can work in the investors' favor when they take a long-term perspective. Compound interest is chief among them. An investor who builds a portfolio over time through a regular investment planning, contributions and reinvested dividends and capital gains (especially in the tax-deferred environment of the RRSP) can significantly increase a portfolio's investment value. The longer it's allowed to work, the higher the return. For example, a $25,000 initial investment supplemented with a $5,000 each year and compounding at an average of 6.5% annual return, will be worth $65,000 after five years, $119,000 after 10 years and $434,000 after 25 years of compounded growth.
A long-term investment plan that involves regular contributions takes full advantage of compounding and enables you to make money on the money you're saving for retirement. You're reducing your risk.
Strange as it may seem, the longer you remain invested in the market, the less risk you may face as an investor. In Canada, the S&P/TSX 300 has experienced its share of short-term volatility but for the long-term investors, the average 40-year annual rate of return has been 10.9%.
Investors with a short-term horizon who move in and out of the market are subject to the full forces of daily, monthly and yearly market volatility. Investors with a 10-year or more investment time frame can expect the periodic fluctuations in their portfolio's value will be smoothed out and the long-term upward momentum of the market will play a more dominant role in determining their investment returns. You're achieving peace of mind
Short-term investors must begin to literally micromanage their portfolios, most often in an attempt to market time their buying and selling in an effort to beat the market. A long-term perspective on portfolio management means not worrying about investment performance on a daily basis. The investments you've assembled in your portfolio are subject to review (quarterly or annually) to ensure they are performing according to plan and generating an overall return on invested capital that is what you expect. When necessary, buying and selling to re-balancing the portfolio and asset allocation decisions can be done methodically and not reactionary or in haste.
Your advantage as a long-term, higher quality investment approach comes from the knowledge that time is actually working on your side and working for you. Thane Fletcher can help you start an investment plan of action that puts time on your side.
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