Introduction to Long Term Investing

Long term investing is a strategy that involves buying and holding stocks, bonds, or other financial instruments for a period of time that is longer than one day. This type of investing is often seen as a more conservative approach to investing, as it allows investors to take advantage of the long-term growth potential of the markets. Long term investing is a great way to build wealth over time, as it allows investors to benefit from the compounding effect of their investments.

Benefits of Long Term Investing

One of the main benefits of long term investing is that it allows investors to take advantage of the long-term growth potential of the markets. By investing for the long term, investors can benefit from the compounding effect of their investments, which can lead to significant returns over time. Additionally, long term investing can help investors to reduce their risk, as they are not exposed to the short-term volatility of the markets. Furthermore, long term investing can help investors to diversify their portfolios, as they can invest in a variety of different asset classes.

Another benefit of long term investing is that it allows investors to take advantage of tax benefits. By investing for the long term, investors can benefit from lower capital gains taxes, as well as other tax benefits. Additionally, long term investing can help investors to save money on transaction costs, as they are not required to pay commissions or other fees for each trade.

Finally, long term investing can help investors to stay disciplined and focused on their long-term goals. By investing for the long term, investors can avoid the temptation to make short-term trades, which can be risky and costly. Additionally, long term investing can help investors to stay focused on their long-term goals, as they are not distracted by the short-term fluctuations of the markets.

Best Strategy for Long Term Investing

The best strategy for long term investing is a diversified portfolio of blue chip stocks and etfs in which you buy a consist amount over time. If you was to have 10k to invest right now instead of throwing that 10k into a investment all at once I would suggest putting about 2500 into a diversified portfolio with multiple sectors of at least 20 or so stocks or ETFs. Look for good historical performers that pay dividends too. Now you have $7500 left over. What I would do is set up reoccurring deposit into my portfolio buying a percentage of those 20 or so stocks I mentioned before. Weekly you could do about 250 per week for about 30 weeks.

Same token applies to those with less money. For example if you have $100 to invest it might be better for you to do invest $5 a week for 20 weeks. Markets go up and down and this will dollar cost average (aka DCA) yourself over time.

When those 30 weeks are up you should have a budget that allows you to at least to continue contributing at least 400 a month. If you can’t afford 400/month in this example you might need to divide that 7500 but longer amount of time. Also I find it better to invest 100 a week than 400 month. The best day for your investments to buy at share price in my opinion is Fridays. Why Friday? Even the big name blue chip stocks like Amazon, APPL, TSLA all get day traded by people with a hell of lot more money than I got.

But I know a thing or 2 about day trading and swing trading. Short term traders usually don’t like to hold over the weekend. Often they will close out positions and start fresh on Monday. Sometimes stocks rally on Friday’s but on average over time from my experience so of the best prices of the week usually come on a Friday.

Risks of Day Trading

Day trading is a strategy that involves buying and selling stocks, bonds, or other financial instruments within the same day. This type of trading is often seen as a more aggressive approach to investing, as it exposes investors to the short-term volatility of the markets. While day trading can be profitable in the short term, it can also be risky, as it exposes investors to the potential for significant losses. Additionally, day trading can be costly, as investors are required to pay commissions and other fees for each trade. Furthermore, day trading can be time consuming, as investors must constantly monitor the markets in order to make profitable trades.

If you’ve read all my articles & blog post here you’ve probably read about my success I had day trading at one time. Yes, I had a good bit of success day trading at one time when we was in a bull market and at the time it was hard to lose. But the market has ups and downs. I don’t know the exact success rates and failure rates of day traders but… If I had to make a wild guess the failure rate for a day trader is probably about 80% or more while the success rate of a long term investor investing in over periods of time decent stocks consistently is probably well above 90%. Now ask yourself do you want to chance being successful 20% or 90%?

Another aspect to think of is day trading is actually time consuming and a lot of effort to be successful. When I was day trading I might make 4k in a half hour on Monday morning and end up being down 12k for the week by Friday. Day trading you are more or less buying and selling the news. Purchasing a low float stock with high volume that people are paying way too much for because they’re pumping it only for it to fall back to reality. Sometimes you get stuck. Sometimes the trading gets halted for news. Trust me when I say there is a lot of painful lessons to learn day trading.

Not totally dissing day trading here at all. When you lose I always liked to think of it as paying for education. Nobody likes going from eating steaks & crab legs to living off of ramen noodles. Point here is day trading is certainly not newbies to stocks or the markets. And I would suggest being a disciplined swing trader before ever attempting day trading.

Conclusion: Why Long Term Investing is More Profitable Than Day Trading

Long term investing is a great way to build wealth over time, as it allows investors to benefit from the compounding effect of their investments. Additionally, long term investing can help investors to reduce their risk, as they are not exposed to the short-term volatility of the markets. Furthermore, long term investing can help investors to take advantage of tax benefits and save money on transaction costs.

In contrast, day trading is a more aggressive approach to investing that exposes investors to the short-term volatility of the markets. Additionally, day trading can be costly and time consuming. For these reasons, long term investing is generally more profitable than day trading.