The objective of choosing long-term investment is to grow your wealth. It is not about getting rich quickly; it’s about making smart decisions and building a diversified portfolio to reach your financial goals safely.
Warren Buffet once said, “If you don’t find ways to make money while you sleep, you will work until you die.”
Longer duration refers to money flowing regularly without putting too much effort into generating it and allows you to balance the loss.
The trick is to make money work for you by distributing your investments at multiple sources, including Mutual funds, Commodities, Bonds, Stocks, etc., which requires fundamental analysis and is less risky than intraday trading.
Here are some of the long-term investment plans:
Mutual Funds
Mutual funds are a pool of money managed by professional fund managers.
The returns generated by investing in Mutual funds are linked to stock market movements and is diversified with lower investment corpus in multiple asset class.
Different types of mutual funds are:
Equity funds – they invest in shares of companies and related securities like derivatives, which trade in the stock market.
Debt funds – they primarily invest in debt and money market instruments that includes commercial papers (CP), certificate of deposits (CD), Treasure bills (T-Bills), etc.
Bonds
Bonds are issued by governments and corporations when they want to raise money.
By buying a bond, you are giving the issuer a loan, and they pay back the face value and periodic interest of the loan on a specific date, usually twice a year, which is credited to the bond ledger account of the holder.
NPS
It is one of the profitable government-backed investment options such as equity, bonds, and securities that provide pension alternatives as per investor’s preference.
ETF
Exchange-traded funds are traded on stock exchanges similar to individual stocks and equity mutual funds. ETFs tend to be more cost-effective and more liquid as they trade on exchanges like shares of stock.
Gold
An all-time favorite investment product. You can invest in gold bars, gold ETFs, gold deposit schemes, and even silver.
Fixed Deposit (FD)
It is a popular way to save money by having low-risk investments that offer tax benefits and a fixed rate of investment on your deposit. They are comparatively safe and secure option.
Index Investing
It is one of the investment strategies that replicates the returns of the index Nifty 50. Nifty large Midcap 250 Index fund also works as a tax-saving scheme.
Large-cap stocks
Investing in multiple Blue chip stocks, such as Reliance Industries, Asian paints, Bajaj Finance, TCS, etc, will enhance the returns by averaging the market risk.
Dividends
A stock dividend is a payment to shareholders that consists of additional shares rather than cash by the company. A company’s dividend is decided by its board of directors.
Real Estate
One can never ignore the potential returns generated by owning rental properties or investing in land, houses, etc.
Focus on excellent investment strategies that suit your personality, lifestyle, and earnings, as well as savings, because price is what you pay, and value is what you get.
Checking daily news that affects market prices on a regular basis is very unhealthy for long-term investors. Unfortunately, it is impossible to find reasons behind event-based market price fluctuations.
Choosing the Best Approach for Investing
Start by defining your investment goals. What are you hoping to achieve by investing? Is it partial income, financial growth, or wealth for your future generation
Consider your risk tolerance ability. Are you willing to risk your capital based on market movement? If you have more aggressive risk tolerance, you can invest in stocks over investing in bonds
Analyze your time horizon. How long are you planning to hold your investment? This will help you choose appropriate strategies
Define your capital. If you are willing to set aside a part of your savings that can be utilized for the best returns possible in the long run, you will be free of any pressure to earn quick money, avoiding aggressive decisions.
Retirement planning. If you wish to retire safely with regular returns in old age without being dependent on anyone, you must look for a stable investment and not high returns with high risk.
One of the Biggest Myths is that Money Grows in Savings Bank Account
The truth is that money grows in numbers because of the interests and not in values or in real terms.
Precious metals are recommended to invest in, such as gold, which will always rise in value even through inflation.
If you wondering how to store gold in your portfolio without buying physical gold, you can invest in gold ETFs or Gold futures.
Industrial commodities – such as nickel and copper, have high industrial demands due to their natural properties that cannot be easily replicated by alternate materials.
The value of commodities has risen significantly decade after decade. Acquiring raw materials is not a good idea; therefore, investing in stocks of mining companies are great way of such exposure.
Below are some of the best-performing Mutual funds with historical data of 10 years
Source - scripbox.com
Remember that long–term investing demands patience in holding the investment throughout the market fluctuations.
Familiarize yourself with the historical performances of each investment idea before you choose.
Diversifying your investments across different asset classes can also help you to spread risk and enhance the potential for long-term returns.
Article by
Nandini Panchakshari
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