Decreasing Your Risk with Long-Term Investing
Investing with a long-term time horizon is one of the most effective strategies for building lasting wealth. While short-term trading may offer the allure of quick profits, it can also come with significantly higher risk. Adopting a long-term mindset can decrease your overall investment risk and position you for sustainable growth over the years.
Long-Term Investing vs. Short-Term Investing
Investing can be a crucial component of building wealth and securing your financial future. When it comes to investing, there are two main approaches: long-term investing and short-term investing. Both strategies have their own merits, but the choice between the two depends on your financial goals, risk tolerance, and investment horizon.
Long-term investing is the strategy of holding onto investments for an extended period, typically several years or even decades. This approach is often favored by those who are looking to build wealth gradually over time, as it allows for the power of compounding to work in their favor. Long-term investors tend to focus on diversified portfolios which provide exposure to a broad range of assets. This strategy is generally less risky and can provide more stable returns over the long run.
On the other hand, short-term investing involves buying and selling assets more frequently, often within a matter of days or weeks. This approach is often driven by the desire to capitalize on short-term market fluctuations and generate quick profits. Short-term investors may use a variety of strategies, such as day trading or swing trading, to try to take advantage of these market movements. While this approach can potentially yield higher returns, it also carries a higher level of risk.
How Long-Term Investing Can Decrease Risk
Long-term investing is a powerful strategy that can actually decrease your overall investment risk. By adopting a patient, long-term mindset, you can ride out temporary downturns and position yourself to capture the market’s natural growth over time. Rather than chasing the latest fads or trying to time the market, as a long-term investor you can build a portfolio that allows you to benefit from compound returns and ride the economy’s upward trajectory.
Numerous studies have shown that investors who stay the course and maintain a disciplined, long-term strategy consistently outperform those who focus on investing in the short term. By embracing the power of time and the market’s natural tendency to rise over the long run, you can minimize your exposure to volatility and position yourself for lasting financial success.
Invest With Bloom Investment Counsel, Inc.
Bloom Investment Counsel Inc. is a Toronto-based independent, privately-owned boutique investment management firm with over 39 years of experience, actively managing Canadian and U.S. dividend-paying equity portfolios.
Our team at Bloom can work with you and your financial team in creating a comprehensive long-term investment strategy tailored to protect, preserve, and grow your wealth over time. Contact us today by calling 416–861–9941 or email us at info@bloominvestmentcounsel.com
This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.