Investment Tip - Gain a Long Term Perspective

Stick to The Basics

For any beginner investor I always suggest mastering the basics and learning the fundamentals of investing. I wish someone told me this when I entered the world of investing. Initially I tried to be fancy using options, speculation and attempted to time the market with technical analysis. What was the result? Loss of capital because I had no idea what I was doing, it was like I was gambling at the casino.

The first book I would recommend to a beginner would be “The Intelligent Investor” by Benjamin Graham. The book outlines the fundamental analysis investment approach Graham began teaching at Columbia Business School and outlines many of the investment principles Warren Buffett used.

Value Investing

Many of the principles outlined in this book are principles that I personally use in my portfolio. When I pick stocks I focus on companies with strong fundamentals, a reasonable price and a lot of growth potential.

When I use the buy and hold strategy I am not concerned with price movements and technical indicators. Generally, this is a passive investment strategy compared to actively trading stocks on a short-term basis.

Long Term Investment Benefits

Longer term investments also have tax benefits. When you hold a stock for the long term, gains are taxed a lower rate than short-term investment gains. In addition, when you hold a stock long enough you can be eligible to receive dividends

Investing for the long-term is a great strategy to use in your retirement accounts such as your 401k or IRA. If you have the urge to be an active trader, then I suggest doing so in an individual brokerage account where you are not risking your retirement savings.

In general, I would always suggest you are fully informed and establish the investment strategy before creating your portfolio. In addition, I suggest you consult with a registered investment advisor if you want to outside consultation.

Best Regards,

Nigel