The Benefits of Long-Term Investing
Jeff Martin is a financial advisor at Cornerstone based in Reno, NV. Jeff has earned the Life and Health Insurance Licensure and has passed the Series 65 examination. He enjoys being able to help clients create customized strategies for their portfolios based on their unique financial goals.
THE BENEFITS OF LONG-TERM INVESTING
We believe that investing should be looked at as a marathon, not a sprint, that is unless you win the lottery, then it may be a bit of a different conversation. There are certainly investment approaches that subscribe to high-frequency day trading, individual stock selection, and market timing. In many cases, these approaches lead to a very expensive way of learning a lesson, particularly for the average investor who has a job and life outside of tracking markets.
WARREN BUFFETT’S INVESTING ADVICE
One of the best investors of our time, Warren Buffett, has a saying that has resonated with me. He shares: “Time in the market beats market timing every time.” Said otherwise, it is a survivability game, the one who plays the longest, wins. This is very much in support of a long-term investing strategy. At the end of the day, Buffett has done quite well for himself, fiscally speaking, employing a long-term investment strategy. This point can be made further if you track his net worth over the years. It certainly did not happen overnight.
THE EASE OF INVESTING
Investing becomes quite easy when you have the luxury of hindsight. Looking back on graphs and charts of holdings, or markets as a whole, it does not take much computing power to identify, “well, buy in big here, and sell all here.” Unfortunately, this is not how the world works and we are left with the need to make decisions based on the available information at the time. Below is an excerpt from an article that you may find interesting as well.
WORDS FROM “TIMING THE MARKETS IS IMPOSSIBLE” BY HARTFORD FUNDS
“Avoiding the market’s downs may mean missing out on the ups as well. 78% of the stock market’s best days occur during a bear market or during the first two months of a bull market. If you missed the market’s 10 best days over the past 30 years, your returns would have been cut in half. And missing the best 30 days would have reduced your returns by an astonishing 83%.”
GROWTH DOESN’T HAPPEN OVERNIGHT
It is also worth noting that, say for instance, you are trying to find the next Apple, Google, or Amazon in the garage phase. While these are great companies that have greatly impacted the world, their share price did not jump from IPO to anywhere near current levels without years of growth, progress, and innovation. Moreover, for those who are trying to take advantage of quick and sharp stock movement, typically the margins are slimmer, and again, you will need a lot of luck, aligning of stars, and a rabbit’s foot to get those trades executed as desired time and time again. In fact, statistically speaking, each timing trade would become more and more challenging to get it right (consistently). So unless you have a crystal ball with 100% accuracy, you will be better off strapping on your long-distance shoes and getting ready for the marathon.
WHERE TO GO FROM HERE
While investment returns don’t just happen overnight, they can be helped with proper, comprehensive planning. At Cornerstone, we look at the entire retirement picture for our clients, including the investments that we determine make the most sense based on our clients’ income needs and retirement dreams. To see how we can help you live out your ideal retirement, call us at (775)853-9033 or click here.
SOURCE:
Timing the Markets is Impossible by Hartford Funds
Based in Reno, NV, Cornerstone is for individuals and families looking to grow wealth, protect and preserve their life savings, and plan for the distribution of their estate in a tax-efficient manner through a tailored strategy. Schedule a time to discuss your financial goals with us.
This information does not constitute legal or tax advice. PCIA and its associates do not provide legal or tax advice. Individuals should consult with an attorney or professional specializing in the fields of legal, tax, or accounting regarding the applicability of this information for their situations.