Finance

6 SMART TIPS FOR SUCCESSFUL LONG-TERM INVESTING

Successful investing doesn’t happen in a vacuum. Other aspects of your investment plan, such as how much outstanding debt you have and how much you can save, work in tandem with your investment strategy. Following are some smart tips for successful long-term investing:

  1. Create an emergency fund

While you continue investing to achieve long term goals, ensure that you build an emergency corpus big enough to meet your monthly expenses of at least 6 months. These expenses should entail your daily living expenses, insurance premiums, utility bills, EMIs, rent, contribution to your crucial financial goals, tuition fees of your children, etc. Without a proper emergency fund in place, any unforeseen emergencies such as loss of income or job loss due to disability would force you to sell your existing long-term investments. This would not only impact your long-term investment goals but might also force you to sell your mutual fund investments at a loss in case the emergency strikes during bearish market conditions.

  1. Consider passive investment if the active investment isn’t your style

Apart from being showered with different types of mutual funds, an investor can also choose the investment style. There are two styles of investment – active and passive investment. Under active style of investment, a fund manager makes particular investments to outperform a benchmark or investment index. However, under the passive style of investment, an investor follows a buy-and-hold strategy. They avoid undergoing any additional risks and make investments similar to the underlying index. Passive investment is usually less expensive than active investments, as fund managers do not spend their time and efforts on analysing and understanding the financial markets.

  1. Consider seeking professional help

One of the best ways to organise your strategy and invest in mutual funds is by seeking the advice of a professional or an expert. Not only can they help in prioritising short-term and long-term goals, but they can also help in making sense of volatilities in the market. This will further help you in comprehending when it’s time to react or maybe, stay put and do nothing.

  1. Opt for SIP mutual funds

Investors who lack the skill of timing their investments can opt for the SIP investment route while investing in equity mutual funds. Taking the SIP route helps in ensuring regular investment while averaging the investments during market corrections. It also instils financial discipline among investors. You can also use an SIP calculator to understand the returns on your mutual funds.

  1. Stick to your plan
    Consider the share market like a roller-coaster – the turns and twists are its part and parcel. It is a small price paid by investors to accumulate wealth in the long run. Sure, market volatility can be nerve-wracking. However, don’t forget it’s these challenging times that decide your potential gains in the market.  It is essential to understand that when financial markets face a downturn, they are most likely to be followed by recoveries. 

Always align your investment options with your financial goals, risk profile, and investment horizon. Hope this article will serve you in managing your finances in a more judicious and better way. Happy investing!

 

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