Most successful investors suggest people buying stocks in the long term. Investing in stocks in the long term has its fair share of advantages and disadvantages. Buying stocks in the long term is one of the most popular investment strategies in the market.
A person who is investing in stocks for the long term should not try to time the market but give the time to stocks to grow eventually with time and provide healthy returns in the long term.
Investing in stocks in the long term are not bought on hearsay but by conducting in-depth research on past performances, revenue generation, debt, prospects, etc.
Best long term stocks present in the Indian stock market at the moment
(Please note that this is only for educational purposes and not buying or selling recommendations. Only Buy after you have done your Analysis)
- Reliance Industries
- Tata consultancy services
- HDFC Bank
- Hindustan Unilever
Before investing in stocks in the long term, consider…
The time period
Investors need to evaluate the time for which they are putting their money and consider the number of years they’ll be investing their money. This way the risks of losing money are considerably less as the more time long term stocks will have, the more they’ll be riding out the ups and downs of the market.
For example, if an investor hasn’t thought about the period for investing and takes out their long term investments in a short period then the profits could be way down the expectation. Therefore one must know about the period that they are investing their money to consider good returns from the same.
Diversification in any kind of investment is important as no investment strategy gives any guarantee of the profits being generated. There might be a company that has given extraordinary past performances and checks all the boxes on the list but still isn’t able to generate as much as you expected in the future.
To avoid this kind of situation, diversification is the key. It allows a person to reduce the risk of losing their money or just increase their profits as a whole since the capital is divided into different sectors. Index funds are a great example of such diversified investments.
Understanding the risks involved
You must have heard that stocks and mutual funds are subject to market risk in many commercials on investing. This simply means that an investor should be aware of the risks that are involved while investing.
Since a person cannot control the market situation or the volatility of the market. But, they can reduce risk by diversifying their portfolios and doing full-fledged research on the stock.
For example, someone who wants less risk and constant growth over the years can invest in the Nifty 50 as its TRI has given 14.18% CAGR returns over the last 20 years.
Why buy stocks for the long term?
Long-term investments have their advantages. People are often looking to make investments for a longer period as it’s a safer option if they pick the best long term stocks.
They allow earning more in the long term than in a short period and are prone to higher risks. Long-term investments would only generate high returns for people who aren’t selling the stock as soon as the market has fallen or just to make petty profits.
Long term stocks take little to no time for an investor from their day-to-day activity once they have invested in them because unlike short-term traders, long term investors need not keep a constant eye on the market to keep checking the situation.
Buying long term stocks is one of the best ways to make money over time. It has less risk, takes no time of the day, and investors can just relax and do their thing once they put their money into the market on long term stocks in return for lucrative profits.
Is it a good time to buy stocks in the long term now? (Conclusion)
There is no such time as a good time while investing in long term stocks. Investors can buy these stocks at any time as they’ll be kept for a longer period and won’t be affected by the current situation of the market much. As the saying goes, the time in the market is more important than timing the market. Therefore if you have done your research properly and are looking forward to diversifying your portfolio, now is the time to buy long term stocks.
Though any time can be chosen for investing in long term stocks if any stock is available at a very discounted price meaning it has fallen under its value too much due to external market factors, it might be considered a good time to buy that stock.
It is considered a good investment habit to be investing regularly as it helps to get stocks at a discounted price and can average out the buys made at a higher price too. All these are ways to do healthy investments and can certainly help a person make good profits from the same.
Keep in mind that an investor shouldn’t put all their money in the market together. Investments should be done according to one’s finances. It is very important to plan out expenses and keep a percentage dedicated to investments per month. This will help to be disciplined with investments in the long term.