seven principles of long term investing

Seven Principles of Long Term Investing

When you invest for retirement, you are in it for the long haul, but don’t make the mistake that you can set-it-and-forget-it. There are literally hundreds of variables that can impact your investment portfolio and no one person can track or predict them all. New administrations, federal and state, bring changes in economic policies. Domestic and foreign unrest can cause uncertainty. Regardless of what is driving the changes, some stocks are increasing in value while others are decreasing. With so many variables outside of your control it’s easy to fall into the trap of becoming reactive. To help you avoid the trap, we offer you 7 Principals of Long-Term investing. These 7 principals will steer you around the pitfalls that trip up many investors. Things like fear, greed, lack of discipline and groupthink can wreak havoc on a portfolio and prevent you from achieving the standard of living you want in retirement. Nothing is perfect, but if you follow our principals you will be better equipped to deal with what you can’t control making you a happier and less stressed investor.  

Unlike “buy low, sell high” (which is a myth we will take on at some future point) the seven principals are not investing strategies. Rather, they are general practices you should follow over the course of your investing life. We will present them to you in two ways. First, you will find the list below, with brief descriptions of each. Second, over the next several weeks we will go into depth on each, so you will understand of each individually and how they play as part of the whole.  

Again, nothing will guarantee investment success and this list is not exhaustive, but you will find them helpful and useful in making investment decisions.  

  1. Total Return on Investment. As you login to your accounts and to check balances and the latest gains and losses, keep in mind that you should focus on the total return on investment (ROI). The performance of your investments important, of course, but there are other factors to consider. Things like fees, taxes and inflation may not affect the daily performance and you may not see them lurking, but they are there, and each will affect your total ROI.  
  2. Don’t Chase the Crowd. The economic law of supply and demand also applies to investing. More often than not, by the time you hear about the latest, greatest investment the demand for it has driven the price up so high that it no longer makes sense to invest.  
  3. Remain Flexible and Diversified. You are probably aware that it is wise to include different types of investment vehicles in your portfolio such as stocks, bonds, international securities, etc. The complement to diversification is flexibility. Your investment strategy should be flexible so you can quickly adjust as the situation warrants. Recall the factors we mentioned at the beginning, the ones you have no control over. Flexibility can be the difference between huge losses and gains when the unforeseen happens.  
  4. Buy Value. It’s important to keep an eye on market trends and economic outlooks. But using them to decide where to invest can be a recipe for disaster. Buying value – quality investments with good fundamentals – is a strategy that will server you better over the long run 
  5. Manage Risk. Probably the most individual of all the principals, there are two factors that you need to consider when determining risk: personal tolerance and goals. Balancing the two are important to your sanity and investing success.  
  6. Learn from Mistakes. There is a rule of investing for retirement for which there is no exception: you will make mistakes. When you think about managing investments over the course of 30 years or more, you can expect to be perfect. What’s important is how you react to the inevitable and what you learn from it.  
  7. Monitoring Your Investments. Are you up to the challenge of managing your portfolio or are you a candidate for hiring someone to do it? That is the first question you need to answer.  


The 7 Principals for Long-Term Investing can guide you today and for your entire investing future. Over the next several weeks we’ll dive deeper into each, give you questions to consider and include actions you can take now to help you over the long run.