What to look for when investing for the long-term
Wednesday 24 November, 2021
The word ‘investing’ can be banded around all too easily these days. I often hear people say they are invested in a certain stock or even cryptocurrency, and a few days later they are selling it because they have made a profit or selling it because they have made a loss.
To a financial adviser like me, this is not ‘investing’ as we know it, but trading.
When Thomas Oliver financial advisers offer financial advice and talk to our clients about investing, we usually recommend you invest for a minimum time frame of five years. Consequently, investing for the long-term means investing your savings for over five years. The reason we recommend you invest for a minimum of five years is that history has taught us even if you invest at completely the wrong time, for example just before a recession, when markets subsequently fall, then this still gives you enough time to go through a market cycle where stock markets may decline and then hopefully rise again.
The key point that we stress to clients is that you don’t ever lose or gain any money until you sell your investments. If investors understand they are investing for over five years they begin to worry less about the short-term stock market movements and focus more on the long-term historical returns.
Why should you invest for the long-term?
Now investing for the long-term should be at the forefront of everyone’s mind, but unfortunately life is not simple and certain life events will happen. These events may change your attitude to investing or change your capacity for loss. The money you need and the amount of savings you have will also change throughout the years, and this will also affect how much risk you want to take with your investments.
Speak regularly to your financial adviser
As a result, it is very important that you have regular reviews with your financial adviser. Your Thomas Oliver consultant will ask you all these questions to find out if your personal circumstances have changed. We can then amend your investments to suit your new situation, making sure your money is invested in line with your requirements. For my clients I send them a monthly report and ensure they meet for a yearly review meeting, as I feel it is important to have regular communication to gauge there changing requirements. I also set up regular online meetings or call clients throughout the year, as it is important to me that we stay in touch regularly as clients deserve regular interaction when paying for their financial advice service.
Diversify your investments and reduce your risk
Another important factor when investing for the long-term is diversification. It is important to diversify in terms of geographical and industrial areas when you are looking to invest in stocks and shares. This is so you benefit from the performance of different countries and sectors around the world, and so you are not overly exposed when certain sectors or areas underperform the rest of the market. Having a diversified portfolio also means you should hold different investments, for example properties, ISAs, bonds, and pensions, so you benefit from different tax advantages, and to ensure you have some investments that are more liquid than others.
Overall, there are several issues that we recommend all our clients consider before investing for the long-term. The above summary is just a brief overview of the main factors. If you have savings and you are interested in investing for the long-term then please get in touch. Our Thomas Oliver financial advisers will offer you a consultation at our expense, so we can go through some of these issues in more detail. We can explain all the key factors that you should consider if you want to begin investing for the long-term, and our qualified financial advisers will get you started on a journey to financial prosperity. We offer financial advice for clients in North London, central London, Essex, Hertfordshire, and Bedfordshire. For more information, please call us at our Cheshunt Head Office on 01707 872000.
Please note: The value of your investment can fall as well as rise and is not guaranteed.