Investing is a Long Game
As an early or experienced investor, there should always be a method behind your madness when it comes to where you put your money.
When you’re pulling the trigger on a new stock, index fund, or crypto, or when you’re selling to cash out on a profit (or loss), this should all be strategic.
For many, this can be overwhelming, yet like everything else, it just requires a few reps as you gradually learn more and find your way.
Investing is a long game. There are no get rich quick schemes and no scamming your way to wealth. It requires commitment and time, and if you’re able to do it right, you’ll be able to set yourself and your family up for generations to come.
No matter your investment style, the key comes down to 2 things: a (good) strategy and consistency. That’s it.
If you can build a strategy around your investments and stand the test of time while doing it day by day, you’ll eventually find your way to wealth. How much and how fast depends on you.
Find Your Rhythm
With both a good strategy and consistency, you have to start somewhere. If you’re reading this and feel like I’m not talking to you (yet) because you don’t have the money to invest — well, I am, and you do.
Trust me, this is not the avocado toast speech or me telling you to toss your frappuccino. I’m simply saying that if it’s $5 or $500, start.
As you’re going through your budget, ask yourself what number you’re comfortable putting to the side each month towards your future.
Before doing this, you should have a payoff plan for any debt and an emergency fund you’re actively working towards. Investing before addressing these two things is like running before walking.
Investing is only as effective as you allow it to be; if you invest $100 this month and decide not to invest anything else for the year, your $100 will not go very far.
Here’s where consistency comes in, where consistency must come in because investing for the long game can not be stop and go.
This is also why it’s essential to find the number you’re comfortable with investing after establishing your emergency fund.
With the emergency fund, you don’t have to worry about being thrown off schedule when life throws a wrench. You won’t have to pull away from investments for a financial crisis – this is what your savings are for.
Consistently investing money has to be a lifestyle adjustment.
Now or Never
With all the market volatility, there’ll never be a “perfect” time to start investing.
There’s plenty of data showing that even if you were to miss the 10 BEST performing days in the stock market over the past decade (or 9), you would still be better off had you just stayed the course and let compounding have its way.
When investing for the long haul, the end goal is to build wealth, which means finding more efficient ways to use your time and resources.
Trying to time the market and using the latest Reddit thread to influence your decisions on when to invest will be an investment career short-lived.
A wise word that’s always stuck with me is that time in the market beats timing the market.
The truth is that no one can time the market, not even the wall street titans we all look up to or the experts at the largest hedge funds.
Because of this, it’s crucial to do research and leverage data when it comes to investing. More importantly, for investing newbies – learning how to develop good habits along the way will set you up for success in the market.
Develop an Investment Strategy, Reevaluate Regularly
There are so many ways to construct an investment portfolio, which is why you have to come up with a strategy and stick with it.
Sticking to this strategy does not mean you’re married to it for the rest of your life; it merely means, when adding to your asset mix, you understand how certain moves play a part in the bigger picture – it’s chess.
This means evaluating your risk level. Do you have a riskier tolerance or a more conservative one?
The riskier investor has a higher allocation of stocks than indexes, mutual funds, and bonds. The same applies on the inverse: more funds, fewer single stocks.
Finding your balance between the two is vital. Life changes, and as it does, it’s essential to step back and level set, reevaluate your positions and decide if the strategy you’ve been using is the one that’s appropriate going forward based on newer circumstances.
Time. Timing is everything and should be the first thing you consider when getting serious about investing. Everyone’s long game is different – what’s yours?
Understanding your time horizon and when you plan to ride off into the sunset with the wealth you’ve worked hard to build will be important when making specific investment decisions. This could make all the difference between putting your cash in a growth stock or a more mature stock.
Diversification. When long-term investing, diversifying your portfolio is also critical. Some asset classes will carry your portfolio in periods where others can’t.
Having your portfolio in a bit of everything puts you in a great position to pull through bear markets while still sitting handsomely during the bull ones.
When in Doubt, Stay the Course
The concept of putting money away for 5, 10, even 20 years for later days isn’t the sexiest thing to think about in a day and age where instant gratification is at its peak. However, the millions of millionaires who came before you that did it would tell you it’s worth it.
Long term investing is the surest way to get you to millions passively by just staying consistent and patient.
There will be hard days in the market, and there will be amazing ones. Just remember to stay the course and not let your emotions get the best of you. Your future self will thank you for it.