Patience can be a powerful ally in weathering volatility in the financial markets.
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Investing a $3,600 raise for one single year could do wonders for you over the course of several decades under various compounding scenarios (see table below). Historically, the 2% compound interest rate could be achieved by investing in United States Treasuries. The 10% compound interest rate could possibly be achieved by investing in index funds. The astute (and lucky investor) could achieve a 15% compound return. Now imagine if you could invest this same raise amount every year?
Always carefully weigh factors before making an investing decision.
Holding on during rough times represents a true test for the long-term investor. However, due diligence is always recommended. A company or industry might not pull through. Ultimately it is your decision on whether or not to keep shares in a company.
A number of financial articles can be geared for entertainment, especially if they are about politicians. While entertainment is nice, always focus and do your own research.
Don’t rely on one single metric such as the P/E ratio. Use a complete analysis to get an overall picture of your investment.
Developing an investment philosophy that works enhances your chances of successful investing over the long-term.
Remember when looking at earnings headlines to dig deeper, think for yourself and make your own decisions.
Finding good quality publicly traded businesses to own over the long-term allows you to sleep better than utilizing trading strategies that could turn on you in a dime.
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William Bias has been researching stocks since 1992 and has been a freelance writer since 2012. He employs a strategic business oriented approach to stock market investing. Archives
September 2016
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