Financial markets can be volatile; however, history shows that holding investments over the long term rather than trying to predict when markets will rise and fall, means you can be more likely to achieve your long-term financial goals.
Long-term investing means you minimise changes to your chosen investments through both the good and bad times. It involves allowing your portfolio to grow over many years instead of reacting to daily market movements, known as market volatility.
Benefits of long-term investing
When you look to invest, the cliché is that you aim to buy when prices are low and sell when the prices are high. However, we’re all human and this can be very difficult to do consistently for two reasons:
- we are influenced by our emotions; and
- investment markets are very difficult to predict.
The impact of transaction costs and taxes
As part of your investment strategy, we can guide you on ways to minimise the impact of the costs of running your investments. Long-term investing can assist to achieve this. When you buy and sell investments you usually incur transaction costs. Since long-term investments are held for longer periods, they are likely to incur fewer transaction costs.
Similarly, there may be tax benefits to long-term investing by minimising the capital gains tax (CGT) payable. If you sell often, assuming a profit, the tax payable and these costs can add up over time.
Transaction costs and taxes may have less of an impact on long-term investors than they do on short-term investors.
We can help you
We will work with you to develop a strategy to assist you to achieve your needs and objectives. This includes:
- Recommending appropriate investments with a focus on long-term growth; and
- Recommending the best strategies to help reduce costs.
Long-term investing does not mean doing nothing all the time. Your portfolio should be regularly reviewed and periodically rebalanced to deliver to your original targets.
Contact the team at LA Wealth today so we can discuss the benefits of long-term investing for your future.
Disclaimer: Any information provided herein is of a general nature only. No consideration has been taken into your objectives, needs or financial situation. Before acting on this information you should consider if it is appropriate for your situation.