Long-Term Investments: The 4 Smartest Ways to Increase Your Return

So how do you invest to maximise your wealth in the long run? Here’s our advice for getting the most from your long-term investments.

See also:

There are many reasons to invest for the future. Whether you want to raise a deposit on a house, save for your retirement, or see the kids through university, it’s always good to have a nest egg.

So how do you invest to maximise your wealth in the long run? Here’s our advice for getting the most from your long-term investments.

Long-term investment strategies

If you’re investing to raise money for the future, you have lots of long-term investment options.

Numerous different stocks and investment vehicles exist, each with their own risks and unknowns. But there are few safer, more reliable methods out there than long-term investing.

All you need to do is come up with a long-term investment strategy that reflects your wealth, the returns you want to see, and the amount of risk with which you’re comfortable.

1. Think long term

What most worries people most about investing is market volatility.

Every time there’s a sudden market shift, the papers fill of stories about investors losing everything. But those are generally people gambling on short-term fluctuations. Long-term investments have a much lower level of volatility over time.

In other words, if you invest over longer periods, short-term downturns will have less negative effect on your wealth.

The key when investing long term is not to panic when you see a falling stock market. If you don’t sell then you haven’t lost anything, and because you’re playing the long game, more than likely your investment will recover within a few months or years.

2. Research market trends

Investments of any kind shouldn’t be based on guesswork, and long-term investments are no exception.

In fact, because long-term investment strategies typically run for so long, there is usually abundant data for you to draw from when considering an investment.

3. The miracle of compound interest

One of the greatest advantages of long-term investing is compounding your earnings.

Interest or dividends you earn are reinvested and that reinvestment earns extra interest the following year. This gives you far greater potential to turn relatively small sums of money into much larger ones.

As a very simple example, say you invest £1 in a product that gives a 100% annual return (I wish) for five years. At the end of the first year you’ll have £2. If you take your profit of £1 out every time, you’ll earn £5 in total on top of your initial £1 stake. That is £1 each year.

If you leave your profit in and reinvest it, your £2 from the first year will become £4 in the second, £8 in the third, etc. This’ll leave you with £32 at the end of five years. See how the curve sweeps upwards over time?

Whilst this is an overly simple example, it works just the same for a 3% annual return. It also gives the possibility of relatively small sums earning large amounts if they’re left in place that little bit longer.

4. Research your investment tax responsibilities

Advantages are also reaped through the tax system. Investments held over the longer term are taxed at a much lower rate than short-term gains, which are considered part of your income.

It’ll also save you such things as transaction fees that you’d incur from active trading.

Going into your investment equipped with this knowledge gives you a clearer understanding of which long-term investment options are the least costly.

The biggest benefit of investing over the long-term is its accessibility. You don’t have to be a financial expert and you don’t need to scan the stock market every day. For responsible investing with minimal risk of loss, discuss long-term investment strategies with your financial advisor.

Our free Guide to the 10 Rules of Successful Investment

For more comprehensive information about short-term and long-term investment options and strategies, download our free guide.

You can download the guide instantly and for free by clicking the button below.

Expert Wealth Management provides independent financial advice to suit your individual needs and circumstances. Receive personalised investment advice tailored to your exact requirements and prepare in the best way for the future.

Download my free guide to the 10 Rules of Successful Investment

Jonathan

About the Author

Jon is a highly qualified and experienced Chartered Financial Planner and Certified Financial Planner with over 27 years’ experience. He loves working with clients who are passionate about getting the most out of life and feels his job is to support them living life to the fullest. Read more from Jonathan...
This article is distributed for educational purposes and should not be considered investment advice or an offer of any product for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. Past performance is not indicative of future results and no representation is made that the stated results will be replicated.
Dom, your expert advice and management of our modest resources has made our retirement more comfortable than we ever imagined it would be. D & Y P (Suffolk)

Expert Opinion…

Costs Really Do Matter

Jonathan, December 3rd, 2018

Human beings are not well wired to be investors. Not only are we not very good with percentages - often accepting seemingly small percentage charges as immaterial - but we also grossly underestimate the impact of compounding these deductions from our portfolios over time.

Read More
Quarterly Investment Report October 2018

Dominic, October 26th, 2018

The aim of this report is to show clients how the six EWM portfolios compare to other investment management group’s result in the period 1st September 2015 to 30th September 2018.

Read More
Expert Wealth & FinalytiQ – An Enlightening New Partnership

Jonathan, October 22nd, 2018

Sharp eyed clients may have noticed guest content from the fantastic Abraham Okusanya of FinalytiQ contributed to our Expert Opinion section earlier this year. We're now pleased to be able to announce a new partnership between Expert Wealth and FinalytiQ that will allow us to further improve the standard of service we can offer our clients.

Read More
T: 01993 772467      F: 01993 775067      E: advice@expertwealth.co.uk

Expert Wealth Management, West Wing, The Old Dairy, High Cogges Farm, Witney, Oxfordshire, OX29 6UN


Your Protection: In the unlikely event of your ever having a complaint which we have not been able to resolve amicably, you have recourse to the Financial Ombudsman Service (FOS). This is an independent body which will investigate complaints at no cost to you.  The FOS website is www.financial-ombudsman.org.uk.