Five Quick Tips For Long-Term Investors in the Stock Market

Updated: December 10, 2023

Investing is not a sprint but a marathon, especially in the stock market. That means when you buy shares of a company, then you should be prepared to let your money “sleep” for many years.

How many? As long as you can, but I always say, “At least seven years, better if more than ten years.”

Fortunately, long-term investing in the stock market is not hard because you basically just buy shares of a good company, hold on to them, and watch their value grow over the years.

But there are some things you should keep in mind if you want to make the most out of your long-term investment – below are five of them.

1. Research first before deciding which companies to buy.

Don’t take investing advice from only one source. Listen to what others say, analyze the information, and decide which best suits your objectives.

Also, remember that it’s okay to be biased towards companies that you actually like, especially if they have shown consistent growth over many years and their fundamental outlook is good.

2. Diversify, and you’ll sleep better at night.

Don’t put your eggs in one basket. This means you should learn to spread your risks by buying several stocks in different sectors.

Moreover, have UITFs, mutual funds, and other instruments in your portfolio. Don’t just buy stocks.

3. Stay with the winners and trade the non-performers.

Even though you’re in it for the long term, you should always take the time to monitor your stock investments. Personally, I check mine at least once every quarter.

I do this because I want to see which stocks are performing at par or better than the index. And when I see an underperforming stock, I take note of it and trade it for better companies when the market goes up.

Of course, you should give them ample time to ride the market first, maybe around a few years, before deciding whether to hold or sell them.

4. Buy low and sell high.

It’s common sense, but you’ll be surprised how many people do the opposite – buying high and selling low. I can’t blame them because emotions sometimes mess up one’s investing decisions.

For example, there was a year when our stock market experienced record highs. People who ignored the stock market for years suddenly start hearing news about it and decide to get into the action, not knowing they’re already “buying high.”

Meanwhile, the already invested saw that time as an opportunity to sell their underperforming stocks (Tip #3 above).

When the market experienced a correction during the second half of the year, many saw the negative percent in their portfolio, and their fears took over – so they decided to “sell low” and take the losses.

However, the smarter investors saw this as an opportunity to buy stocks, and they didn’t have to put out more cash for it – because they simply used the money they got from selling their underperforming stocks early this year to buy the shares.

5. Reinvest the dividends whenever you can.

You’ll be surprised at how much money you’ll actually earn from dividends, especially if you’re investing regularly through cost averaging. If you don’t need the money yet, reinvest it into the stock market – buy a new company or get more shares of your existing ones.

In Conclusion

Always remember that you are a long-term investor – so minimize your trades. Update yourself with the market sentiment, monitor your portfolio, but stay focused on your goal. Don’t forget to diversify sensibly and consider other investments as well.

Lastly, don’t panic when markets occasionally crash (or “correct”). They’re all part of the experience. And believe me when I say that the longer you’re in the market, the less scary these ups and downs will get.

What to do next: Click here to start your financial journey with IMG Wealth Academy
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Photo credit: Ahmad Nawawi

3 comments

  1. That was a good advice fitz…bottom line is don’t be panic when market is down keep cool just wait and it will bounce up again

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