You want long term stock investment but don't know where to start. This article will suggest the right way to invest in long-term stocks to ensure stable profits.
I/ What is long-term stock investment?
The stock market fluctuates in the short term, but over time the general trend is to increase over time. Investing for the long term helps investors avoid temporary fluctuations, allowing them to earn steady profits from the increase in stock prices over time.
Long-term stock investment means that investors buy and hold stocks for a long period of time, usually from several years to several decades. The goal of this investment is to take advantage of the growth and increase in the value of stocks over time to create stable and sustainable profits.
If short-term stock investing focuses on buying and holding stocks for a few days to a few months, long-term stock investing focuses on buying and holding stocks for a longer period of time.
Long-term stock investment strategy is suitable for investors with long-term vision, who want to build assets and sustainable income over time without having to constantly buy and sell stocks. In addition, long-term stock investment strategy also helps reduce transaction costs and optimize profits thanks to tax policies.
II/ How to invest in stocks long term? Which stocks should you invest in long term?
- How to invest in stocks long term
- Long-term stock investing is a strategy to maximize profits from market growth over time. Long-term stock investing is done through the following basic steps:
- Determine investment goals: set clear financial goals (saving for retirement, buying a house or raising children...), decide on the investment period (5, 10 or 20 years)
- Research and select stocks for long-term investment: Evaluate the company's financial situation from revenue to profit, debt and cash flow. Consider the company's management team and its business strategy.
- Diversify portfolio: Invest in many different types of stocks to minimize possible risks
- Create a buy-and-hold strategy: Determine when to buy stocks at a reasonable price (buy stocks when they are below their intrinsic value or when the market is in a downturn). Maintain a long-term holding strategy regardless of short-term market fluctuations.
- Regularly monitor and review portfolio adjustments: Review and evaluate portfolio performance quarterly and annually, if there are major fluctuations in the company or market, consider adjusting the portfolio.
- Take advantage of compound interest to reinvest: This means using profits from stocks to buy more stocks, thereby growing assets over time.
- Types of long-term investment stocks that investors can refer to:
2.1 Blue-Chip Stocks
For example: Stocks of large, stable and reputable companies in the market that pay regular dividends such as Apple, Microsoft, Johnson & Johnson.
2.2 Growth stocks
Stocks of companies with higher than average growth potential, often in technology or innovation industries like Tesla, Amazon, Nvidia.
2.3 High dividend paying stocks
The stocks of companies that pay regular dividends and have high dividend yields. Investing in these stocks can provide stable income and sustainable growth potential. Examples include Procter & Gamble, Coca-Cola, PepsiCo.
2.4 Shares of globally operating companies
For example, Nestlé, Unilever, IBM are globally operating companies with strong international presence and great potential for global expansion.
2.5 Stocks of companies in potential industries
For example, NextEra Energy, Moderna, Beyond Meat... these are companies in the list of industries with high potential for future growth such as biotechnology, renewable energy...
Above are the top 5 long-term investment stocks for those who are looking into long-term stock investment to refer to. However, choosing long-term investment stocks should be based on careful research, considering investment goals and risk tolerance of each individual.
III/ Why should you choose long-term investment in stocks?
Long-term stock investing is an investment strategy of buying and holding securities including stocks, bonds, fund certificate, other derivatives…, over a long period of time from several years to several decades. The goal of long-term stock investment is to take advantage of the growth and development of companies and the stock market to create stable profits. Long-term stock investment involves the need to buy stocks with growth potential and hold them for a long time, the decision to sell stocks is less frequent than short-term stock investment.
>>> See more articles: Which stocks should new stock investors buy?
The reason to choose long-term stock investment is because:
- Long-term investing allows investors to take advantage of stock market growth over time.
- Minimizing the impact of short-term fluctuations, long-term investors can focus on the long-term value and potential of (stocks, bonds)
- Holding stocks/bonds… for a long period of time helps investors receive compound interest, which means investors not only receive profits from the increase in stock prices but also from a fixed interest rate on those profits, creating a loop of increasing profits.
- Long-term stock investments have lower transaction costs than short-term investments.
- Many countries have tax incentives for profits from long-term investments in stocks.
- Long-term stock investments also help protect one's assets from the effects of inflation.
- Long-term stock investment requires patience and discipline, so holding stocks for a long time helps investors improve their financial management skills and make smart investment decisions.
IV/ How to invest in long-term stocks effectively
No different from long-term stock investment, long-term securities investment is a broader category, but to invest effectively and generate stable profits, investors must also take important steps such as determining goals, diversifying investment portfolios, choosing suitable assets, taking advantage of compound interest, monitoring performance and patiently pursuing strategies.
- Determine what your long-term investment goals are (retirement savings, education and raising children, building a house…)
- Diversify your investment portfolio to minimize risk and optimize profits effectively, you can allocate capital to assets such as stocks (Choose companies with good growth, paying regular stock and dividends), bonds (government bonds or stable corporate bonds), index funds (like the S&P 500 or VN-Index that help you hold many stocks in the same market index), and mutual funds (help you allocate capital to stocks, bonds, and other financial assets)
- Analyze and select appropriate assets, considering factors that match your investment goals. Specifically, for stocks, you need to evaluate the growth rate, financial situation and profitability of the company. For bonds, consider the interest rate, maturity and safety level of the bond issuer. For index funds and open-end funds, consider management fees and the rate of return compared to the market index.
- Monitor investment performance and adjust portfolio periodically: Investors need to evaluate the growth of securities including stocks, bonds and investment funds to see if they are still suitable for their financial goals. If they notice fluctuations in the market or changes in personal finances, they need to quickly adjust their investment portfolio to control profits and prevent risks.
Long-term stock investment or long-term stock investment is a strategy that helps investors optimize profits, helping to minimize the risk of financial loss in a volatile market context. By being patient, analyzing the market and each type of stock or securities asset carefully to diversify the investment portfolio effectively, investors can create stable profits, sustainable growth for the future.
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