10 Tips for the Successful Long-Term Investor 5.00 / 5 (100.00%) 1 vote

How you approach any investment opportunity will be heavily dependent upon your risk tolerance, your spending abilities and your short and long-term goals.  People who are looking to build stable portfolios that provide ongoing and relatively passive income will need to allocate their assets and manage their investments far differently than those who are simply looking to make a bit of fast cash with financial instruments like binary options.  Following are 10 tips for the successful long-term investor.

10 Tips for the Successful Long-Term Investor

1. Avoid pursuing hot tips.

Getting hot stock tips from any source is not what creates long-term success.  Knowledgeable investors always make their decisions based upon solid research.  They make sure that they understand markets, have strong sources and have carefully analyzed their goals, spending abilities and risk tolerance among other things, before making any major moves.

1. Dont let minor losses get you down.

Losing money in any amount can be disheartening.  With long-term investments, however, losses are inevitable.  These events will give you a valuable opportunity to learn more about the market that you are trading in and the different financial instruments youre using.  The knowledge that you glean from a minor loss can actually prove invaluable.

1. Steer clear of penny stocks.

Penny stocks are certainly appealing, given their extremely low prices.  These products, however, entail far more risk than pricier stock options.  Moreover, companies with higher share prices tend to be a lot better regulated.

1. Stick with proven strategies.

If you find something that consistently works for you, dont waste your time trying out new strategies for picking stocks or formulating trading theories.  When youve got a trading pattern that produces good and dependable results, youll be far better off than if you chose to flip flop between different trading methods instead.  Consistency often pays.

1. Think long-term.

Long-term traders have to keep their long-term goals as their focus.  This is important for ensuring that you have allocated your assets accordingly.  Long-term investments are generally less risky than short-term ones and this often means that they have a lower profit potential as well.  If you consider how your current holdings will pay you over time, however, you will be far more comfortable in the low-risk positions that you are currently holding and in your short-term gains, no matter how modest these might seem.

1. Consider the future potential of stocks.

An investment that you purchase today may not bring in the returns that you are seeking just several months from now.  If you want great returns over a much more considerable span of time, however, this same investment could be well worth holding onto.  Think about the long-term earnings potential of different investments, rather than considering how these can pay you right now.

1. Consider lesser known companies.

Companies that may not be well-known today could be major household names tomorrow.  This makes it best to diversify your portfolio from time to time by adding in a few shares that youve purchased from up and coming businesses.

1. Sell your losers.

It is important to be realistic about major downturns and their long-term impact on your profits.  When the time is right, make sure that you know when to offload your losers.

1. Dont let personal trading rules limit you.

If you have a winner on your hands, let it ride out as long as you can.  Choosing to sell your stocks each time youve doubled or tripled your assets will severely limit your overall profit potential.

1. Dont make tax considerations your first priority.

Of these 10 tips for the successful long-term investor, this is one of the most important.  While you want to minimize the impact that taxes have on your profits, your tax-related concerns should not deter you from taking advantage of solid investment opportunities.