Introduction

When we wake up in the morning and scan the top financial headlines of the day, oftentimes we read about a popular company stock skyrocketing (e.g. the likes of Tesla and Netflix) – or certain industries and asset types (think cryptocurrencies) that have reached meteoric heights. This can leave us thinking, “if only I had invested in that stock earlier” – but market hindsight is always 20/20.

While we can do our research, due diligence and utmost best to pick the market winners, the ups and downs can be out of our control. But what is certain is that the market does go up, down and even sideways – which is why investors should always be attuned to the long-term. Investing is best played as a long game with market fluctuations inevitable – but surmountable, as long as you stay the course with a long-term game plan.

As Warren Buffet famously said: “The stock market is a device to transfer money from the impatient to the patient.”

Compound Growth

When it comes to building your wealth, the time element is a critical one – and a factor that you can control. It is important to note the ‘time value of money’ – that money received closer to the present is more valuable, as it can be reinvested for a positive return.

Managing a long-term investment portfolio means a continued long-term perspective – consistently adding new funds, regularly reviewing your asset allocations, reinvesting earnings and managing your risk by rebalancing.

Another key element to note is the ‘magic’ of compound interest – the principle whereby the interest you earn, generally on savings accounts and loans, earns interest over and over. The more time you have, the larger your interest balance becomes, due to exponential growth.

Thus, the longer timeframe you have (the earlier you invest your money), the sooner your money can begin growing – and reinvesting earned interest will contribute to this compound growth. This is an example of your money working for you.

Habits and Tips

Known as the ‘father of value investing,’ Benjamin Graham noted that the best way to measure one’s investing success is not by whether you’re beating the market – but by whether you have in place a financial plan and behavioural discipline that can lead you to your financial goals.

For retail investors playing the long game, it is key to understand your own habits and behaviours – and how these actions can lead to long-term benefits, or detriments.

With the idea of long-term benefits in mind, investors should be sure to stick to their financial plan, keep long-term goals in mind and resist emotional investing. Don’t be afraid to sell off investment to mitigate further loss, and understand that the market fluctuates – long-term investors shouldn’t be bothered by short-term volatility.

As your investments build up over time, so do your fees. Be mindful of fees associated with investment products and services that may seem small at first glance – but over time, can have a significant impact on your portfolio.

As mentioned above, it can be easy to buy into the hype of a ‘hot stock’ or a ‘hot tip’ given by a trusted friend or adviser. Active, short-term trading, can be a quick path to a sizeable return – but often involves greater risk. Keeping in mind long-term goals, it is more important to check the company’s fundamentals – and invest based on the stock’s future potential rather than its past performance.

For investors who have time on their side, looking ahead towards long-term investments can help you maximise your profits