When you invest for your financial goals, think of the process as a marathon and not a sprint. According to Dr. Anosh Ahmed, long-term investment requires careful planning and preparation, whether saving for your child’s education or retirement.
Because long-term investments have extended durations, many people lose motivation or get distracted by unnecessary needs, disconnecting them from their day-to-day life and achieving their financial goals.
Generally, long-term investors spend more time planning, assessing, and quantifying their financial strategies. At the same time, they evaluate their income needs and lifestyle demands. Dr. Anosh Ahmed says it is crucial to make an informed decision when choosing specific bonds, stocks, or mutual funds.
Define Your Specific Goal
According to Dr. Anosh Ahmed, investing with other goals than making money is one of the leading causes of failure, frustration, and desperation. Therefore, align your investments with a specific and measurable goal.
The purpose is to calibrate the risk and ensure higher profitability, allowing you to reach your goal. At the same time, it increases your motivation to put money aside from time to time.
When you save money and invest it for specific, measurable, and quantifiable goals instead of putting money away from undefined future needs, it provides focus, concentration, and motivation.
Besides, you worry less about short-term volatility when you focus on future goals. Remember, this allows you to take additional investment risk and streamline your long-term growth.
The Sooner You Start, The Better
Although it is critical to understand how much money you want to save each month, when you begin to save is even more important. According to Dr. Anosh Ahmed, the sooner you start, the more time you have to create an investment snowball and roll it down the hill.
So, this is the power of compounding, meaning a higher return on accumulated dividends, interests, and capital gains. Therefore, your money will grow faster over time, particularly in retirement accounts with tax-free growth.
Leverage Tax Deferral Opportunities
Everyone wants additional income in their paychecks. However, many people lure for a few dollars, dissuading them from preparing for the future. Dr. Anosh Ahmed says, like compounding, tax deferrals are an excellent opportunity for people to speed up their savings.
Dr. Ahmed suggests contributing at least 15% to 20% of your pre-tax income to your retirement plans. You can benefit from matching contributions your company or employer may offer. So, take advantage of this free money.
With time, the power of compounding with tax deferral will benefit you. However, it is crucial to start saving early and reach your financial goals efficiently, reliably, and quickly.
Create an Emergency Fund
You can’t fully leverage the outcomes when you don’t have an emergency fund. According to Dr. Anosh Ahmed, the general rule is to set aside enough money to cover six months of living expenses.
The purpose is to protect yourself against unpleasant and unforeseen issues like job loss. Likewise, this will safeguard you against premature liquidation of long-term assets, particularly when the stock market and economic slump.
Make Informed Decisions
Dr. Ahmed has extensive knowledge of long-term investments and how to make the most out of them. For instance, Dr. Ahamed says stocks work optimally over the long term. Deciding to purchase or sell them daily, weekly, or monthly has a higher chance of losing money. Therefore, try not to do this!
Moreover, when the market becomes turbulent, avoid information overload, and ignore TV channels, social media, and access to financial data. Otherwise, you will have confusion and get overwhelmed with data, causing frustration.
Creating a solid plan and sticking to it is the key to success. Think thoroughly and make informed decisions based on the analyzed data. Always focus on whether your decision aligns with your long-term investment goals.
Final Words
Investments in bonds, stocks, real estate, mutual funds, bullion, etc., are excellent options for people looking to invest for a prolonged period. Follow the tips and tricks given above to reduce risks and ensure higher profitability.
