6 Tips For Investing For The Long Term

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Having money to invest can be liberating and empowering, especially if you don’t have to worry about living paycheck to paycheck anymore. You can finally do the things you’ve always wanted to do without any limitations holding you back! But where do you start? How do you know what the best way to invest your money will be? Here are six tips that can help you start investing now so that you have more freedom in the future.

1) Read, Read, Read


To protect yourself from bad investments, you need to know a lot about financial markets and your options. This doesn’t mean learning to day trade, but it does mean staying up-to-date on news, economic trends, and investment strategies that could help you grow your nest egg.

Start by reading Barron’s or other financial magazines and working through their annual guides to various sectors of investing. Read books written by experts in asset management and follow any bloggers who seem particularly knowledgable on these topics.

2) Know the Difference Between Good and Bad Debt


Good debt is an investment, bad debt is a liability. If you’re borrowing money to invest in your future, that’s good debt. If you’re using it to pay for a vacation or buy frivolous things, that’s bad debt and should be avoided as much as possible.

3) Understand What Your Fees Are


If you’re investing through a brokerage firm, be sure to keep an eye on what kind of fees you’re paying—and if they’re worth it. If you have questions about your investments or would like some guidance on what specific financial products are right for you, ask your investment advisor.

4) Don’t Chase Performance


When it comes to investing, chasing performance is a great way to lose money. You may not realize it, but you’re much more likely to underperform if you try to time your investments or chase after hot funds.

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There’s no need to constantly check on your portfolio and make moves based on what stocks are performing well (or poorly) at that moment in time—it doesn’t mean anything for tomorrow, and most research shows it hurts overall returns over time.

5) Manage Fees/Exchange Rates Effectively


Having your money in multiple places has its benefits, but it’s also important to keep in mind that you will be subject to a variety of fees. Many companies offer free services, but others will charge you for opening an account and/or holding a balance. And if you’re trading internationally, things can get even more complicated as exchange rates vary from one currency to another.

6) Set Sane Targets


Before you begin investing, you need to come up with a plan—and that means deciding how much risk you’re willing to take on. Generally speaking, stocks are riskier than bonds, but they tend to offer higher returns as well.

You should diversify your portfolio: invest in multiple asset classes and hold them for long periods of time. If that kind of stability is important to you, consider looking into so-called index funds or similar investment products.