What are the best long term investment options?

Different investments will be appropriate for different investors. In general, there are three all-time favorite options –

  • Real estate
  • Stocks
  • Gold

    Real estate

business-3362103_640.pngBuying real estate is about more than just finding a place to call home. Investing in real estate has become increasingly popular over the last 50 years and has become a common investment vehicle.Although the real estate market has plenty of opportunities for making big gains, buying and owning real estate is a lot more complicated than investing in stocks and bonds.

Types of real estate investment options:

  • Rental Properties
  • Real Estate Investment Groups
  • Real Estate Trading
  • REITs(real estate investment trust

Stocks

growth-3078543_640Buying a shares gives you fractional ownership of the public company in which you have invested. Essentially, at least a portion of the success of your investment will be tied to the success of the company, or, more specifically, to the desire of other investors to own the same company (since in the short term it’s investors who collectively determine the share price). If the price of the stock increases, your shares become more valuable and you can sell them for more than you bought them for. If the price of the stock decreases, your shares become less valuable and you will receive less than you invested when you sell.

Additionally, some companies pay a dividend, which is essentially the act of returning a portion of the company’s profits to its stockholders. Dividends always increase the return on your investment. They may be paid either in cash or in the form of additional shares of stock.

Investing in stocks can be quite risky, so it is important to research potential purchases thoroughly in order to identify stocks with the potential to produce significant returns without too much danger of losing value. It is usually in your best interest to hold onto stocks for a year or more. The reasons for this include the fees associated with frequent buying and selling, the tax advantages gained by owning stock for at least one year, and possibly most important, the fact that, in the short-term, volatility may prevent an otherwise good investment from accruing value. Given time, a sound investment may recover from temporary dips.

Gold

banking-21689_640.jpgGold is most popular as an investment, of all the precious metals. Currently, there is a lot of buzz about gold as an investment. After the global financial crisis of 2008 and the collapse of a number investment institutions, many investors are taking a greater control of their own financial future. Many have turned to buying gold due to its tangible attraction.

Options to buy gold –

  • Gold bars
  • Gold Coins
  • Exchange-traded products
  • Gold certificates
  • Derivatives, CFDs and spread betting
  • Mining companies

Make sure you have enough information to understand how the investment product works and identify the associated risks.

Read this whenever you are confused about the stock market and you will get answers.

✳ 80% of gains come in 20% of time. So an investor needs enormous patience and conviction to hold stocks or Mutual funds for 10 or 20 years.

✳ Why not all investors get rich? They like to get rich without going through many years of discipline & patience. Process leads to outcome.

✳ An inferior strategy you can stick with is likely to produce better results than a superior strategy you cannot stick with.

✳ Prices change frequently. Value change over a period of time. There lies the opportunity.

✳ Compounding is back loaded. It works well only over a longer period of time. There is no substitute for time in compounding.

✳ 99% of the time, doing nothing is the best thing to do in the market. It is good to be a Rip Van Winkle investor. Activity hurts. Sit still.

✳ You cannot predict or control markets. What you can control is how much you save, investment process and behaviour. Focus only on that.

✳ Random outcome doesn’t invalidate the need for a process. Sound process and consistently sticking to the same increases the chance of luck.

✳ Investors are human. That’s why markets would never be fully efficient.

✳ Markets usually run ahead or fall behind. Rarely in equilibrium. Over or under valuation can last for long time. Don’t time the market.

✳ Buying and selling is easy. It is holding on through ups and downs is difficult but ultimately most rewarding.

✳ Tiny drops of water make the mighty ocean. Invest regularly. Invest for long term. You can create huge wealth.

✳ Not investing in equity is more risky than investing in it. Remember, you need to beat the inflation and retain your purchasing power.

✳ We see past bear markets as missed opportunities. However thinking of future bear markets is gut wrenching. Strange investor psyche.

✳ If someone keeps reviewing value of his house every day, we may suspect his mental health. But that’s what we keep doing with our equities.

✳ Equity investments are subject to behaviour risks. Always keep a check on your emotions while investing.

*Happy Long term Investing* 👍🏼👍🏼🙏🙏

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