How to Invest in the Long Term (and Why)



The older you get, the more you think about your financial future. Of course, many people start planning their financial future while they’re still young, but the majority prefer to spend their hard earned money on gadgets, exotic trips, concert tickets, lattes, craft beer, clothes and whatever else they fancy.

However, there comes a point in time when people realise they won’t be young forever and start wondering how they would be able to afford all those nice things when they retire. And in the interim, there are also children and college funds to worry about as well.

And so you start looking into various investment options until, eventually, you come to the unhappy realisation that there is nothing much you can do with the little money you have currently put aside.


But is this really the case?                                                                               

We have researched some options and found that with long-term discipline, perseverance, and some luck you can turn your $1000 into a hefty sum. Maybe you’re expecting us to give you some miracle formula or a magic investment scheme here, however we’re sure you’re already aware that no such thing exists. After all, it is all a matter of taking the right decisions and managing your risks and funds accordingly. Still below you’ll find some useful advice on how to go about your investments.


Research your options

You don’t want to throw your money to the wind, so the wisest thing you can do is keep a close eye on the markets and the latest developments happening within the global economy.

Here are our tips for beginner investors:


It’s best to focus on lower risk financial instruments, regardless of your investment period. This way, you would face a lesser risk of losing your money, even though you would get smaller returns. However, in the long term, this makes perfect sense. For example, an investment in a popular index has good prospects of being profitable in the long run, despite the temporary drops.

“Don’t put all your eggs in one basket”. It may be a tired cliché, but it is entirely valid for investing. Wise investors always diversify their portfolios. Buying several different types of instruments reduces the risk of losing your entire capital. However, make sure to avoid over-diversification as this might bring more harm than good.


The sooner you start investing, the better

Quite logically, the sooner you start investing, the better—this will give you more time to accumulate your wealth. But hitting the right timing is also important. Ideally, you should buy assets when prices are low, anticipating that these prices will increase over time.

In other words, starting early and at the right time might make you a rich person when you retire. Let’s just take the example, provided by analyst Paul Merriman.

Let’s pretend it’s the year 1970 and you decide to invest $1000 each year in a popular and fast-growing, but stable instrument, which you have researched in great detail.

Let’s also assume that the year-to-year inflation rate in the country is 3% and that the annual index fund rate is 0.1%. Under these conditions, your monthly instalments for the year 1970 would amount to $83.33 per month. Taking into account the yearly inflation rate, you would gradually hike your monthly instalments and, by 1975, they would amount to $99.5 per month.

10 years down the road, your investment would reach $16,187, and after 20 years—$118,874. Provided you continuously adjusted your monthly payments for inflation, 48 years later you would have invested a total of $104,408 and earned $1.9 million.

Of course, you should not forget that high past yields do not guarantee high future yields, so you should do your research for each instrument and keep a watchful eye on the market.


No money for investments? Review and cut your daily expenses!

If you don’t have spare money for investments, take a look at your daily spending and think what could be cut.

If you smoke two packs of cigarettes a day, maybe you could smoke less (of course, quitting is even better) and save some money. If you buy a $5 latte on your way to work, maybe you could save some cash by drinking coffee at home or in the office. Just do the math: 20 working days X $5 = $100 a month; 12 months X $100 = $1200 per year. And this is just what you save from coffee.

If you often eat out or order takeaway food, perhaps you could save some money by learning how to cook at home—this approach is both cheaper and healthier. Also, you could take lunch to work instead of buying expensive food of often subpar quality from the cafeteria.

These ideas may sound small and uninspired, but they will ultimately lead to a thicker wallet.


Don’t raise the stakes if your victory is uncertain

So far, you might have realised that you don’t have to be a financial guru to start investing as early as today. But there is one more, perhaps the most important rule of all when it comes to investing: don’t invest more money than you can afford to lose, especially if you are a novice investor. Do not let emotions dim your judgement when making investment decisions and learn how to control them.

To sum it up, the key to successful long-term investments is to avoid risks and staying safe, raising your stakes gradually and only after thorough research, and avoid making emotion-based decisions. Stay true to these beliefs and we’re certain you’ll someday come to enjoy the fruits of your labour.


One good way to test the deep financial waters without risking any real funds is by opening a demo account with virtual (free) currency. Opening a Delta Trader demo account would allow you to try out your investment strategies using real-time market data and a virtual wallet of €10,000.


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