We’ve written a new blog post that looks at four benefits of long-term investing.
Would you say you’re more interested in long or short-term investing? And do you know which investment you’ve had for the longest/ shortest period of time?
For sure I prefer long term investing but I’m exiting most positions ahead of property purchases so will restart later this year.
Longest investment is some of my shares in big banks, particularly JP Morgan.
Shortest, well right now I have some cash I trade each week. The whole amount on something that’s down even a few pence. Just riding the small waves with a big lump. Even if I only make around £100, it’s better than nothing while I just slowly exit positions in the green.
Short term? AMC Entertainment w/ 1:6 leverage. £5000 in, £30,000 buying power. Got margin called several times but ended up making £18,000 total
My first time paying towards HMRC will be capital gains tax haha
Longest investment I’ve held would probably be ITM Power. Made a solid £2000 off of a £1000 investment in them, I still think it’s true price and inherent value is 2x what it is now.
Overall I want investments that will pay me a dividend that constitutes a salary, but I guess to make that I’m going to need to do some shorter term growth things or stumble upon the next Zoom Inc
The most common problem with long-term investing is that it’s hard to know how much to put aside for the next 20 years, particularly if you don’t have much spare cash and/or you don’t own your own home yet. The self-employed face the issue with pensions too. If you’re going to invest with money you need to buy property, you need to set an appropriate horizon (maybe 5 years - which is generally the minimum recommended for investment).
The benefits of long-term investing only really accrue if you have the capacity/discipline to put in a sustainable amount monthly and forget about it or at least ignore the investment when making your other financial decisions.
When you find it can you tell us
This is where I’m at now - I wanted to start investing, but I didn’t want to invest huge amounts because I know I’ll soon need it for a house deposit.
I figured it’s better to add a small amount now (that I’m not really going to miss/ need) and then just increase it as my circumstances change?
Planning on not touching the money for like 30 years, but we’ll see what happens!
Well, then investment is just not for you right now.
You need to establish the amount you can put away for decades after all your other aims. That may be small, but it’s worth working out the amount carefully. I’d say about 5% of take home pay as a minimum, if you’re not a home owner
What are the benefits of working this out, as opposed to investing whatever you can now and then investing more at a later date?
Time in the market is useful, a week and I’m up £100 or so on a £5000 investment. But consistency is great because you eventually build value up; for example if Apple doubled in price over the next two years if I lump sum dumped in 2 years I missed out on a year or so of gains on that journey
Yeah I understand the benefits of investing over time, I guess I’m just confused why you need to know exactly how much you can invest for the next couple of decades?
Year 1: you can afford to invest *£50 per month
Year 2: you can afford to invest *£250 per month
I’d say it was still worth investing that £600 in year 1.
What do you think?
Agree fully, invest what you can when you can as much as you can
I meant really not how much you can invest, but how much you’ll be able to leave untouched. So, you could put in all your savings right now, but it would be a bad idea if you then have to take them out again next year. It’s about investing at a sustainable level compared to all your other financial aims.
Ahh yes, I see what you mean now