‘Long term investment strategies’ is a broad and somewhat loose term. Of course, there are many different types of investment strategies. But, a lot of them fall under the umbrella of ‘long-term’.
Nowadays, quantitative analysis seeks to make use of data to inform your investing. By looking at data, you can make more systematic, rules-based investing decisions.
You can use these data-driven strategies to build a smarter investment portfolio.
It’s no surprise, either, that data has taken centre stage in the new digital era. But to understand how you can leverage this to your advantage, we first need to ask:
What Is Long-Term Investment
A long-term investment is one that you generally hold for at least a year. Or, more often for longer.
With long term investment strategies, you can take a more aggressive trading approach. This is because you will be able to weather market fluctuation. Over a long period of time, you are better suited to deal with losses.
Long-term investment hinges on the idea of ‘spending time in the market’. This is in contrast to trying to time the market when buying and selling.
Long-term investing focuses on wealth creation. But, as we mentioned, within this umbrella term there are many options.
Types Of Long-Term Investment
Long-term investments can range from anything such as bonds to property. But we will be talking about finance-management and long-term stock investments. For these, there are a few strategies that we see time and time again.
These strategies range from conservative to aggressive trading. They also rely on the volatility of the stocks in which you have invested. For example, are they high momentum stocks in an emerging field?
First, you need to figure out which stocks will work best for your chosen strategy. You would then start with what we call ‘universe selection’. This is where you begin to filter stocks by your chosen parameters, such as:
- And even individual stocks
At this stage, you might also include stocks that are outside your parameters. These may be because they have a high return on equity.
You would then rank these stocks and build your portfolio from them. This is where it gets interesting! The makeup of your portfolio will inform your investment strategy.
Once you have built your portfolio, choose what long-term investment strategy to take.
Buy And Hold Approach
A ‘buy and hold’ approach may well suit more conservative investors who are willing to wait.
Slow And Steady
By selecting superior stocks with low price volatility you can ensure a return on equity. At the same time, you can protect your bottom line.
Another way of looking at your investment strategy would be to consider:
Compound Interest Investing
If you invest with compound interest investing you can earn a return on your seed as well as on your earnings.
This strategy might suit patient investors. It is a desirable plan on the road to financial freedom.
Either way, these are some of the principles behind long-term strategies. Unlike short-term investing, they aim for long-term wealth creation. They also offer more freedom for aggressive trading.
Whichever plan you choose, you’ll want diversification as well as a strategy that suits you. You’ll also want to back your portfolio and plan up by data to take the guesswork out of investing.
Harry Patté-Dobbs is a content writing and PR expert at Pearl Lemon Leads! He’s written for blogs, news, and media outlets and loves films, food, and wellness. You can usually find him either reading or writing.