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6 Reasons Why It Pays To Be Cautious When You Consider Long Term Stock Investing

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Long Term Stock Investing: 6 Reasons to be Cautious
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Think positive – Make it happen – Manifest it!

These have become buzzwords and have their applications, but not in Equity investments. If we were to find some appropriate buzzwords for long term stock investing would be more like:

 Be Cautious – Do your research – buy Long term investors stocks! Be Cautious – Do your research – buy Long term investors stocks!

Long Term Stock Investing – The opposite of optimistic is not pessimistic but cautious

You’ve heard the high drama stories of people going from the proverbial rags to riches in a heartbeat with suitable investments. They usually start with “You know she bought bitcoin when it was ……” and other examples. These are all true and a combination of fantastic skill and pure luck. The flip side of this is the stories you don’t hear that talk about how someone lost everything they had or were millionaires one day and left penniless the next. It is because human beings don’t like to hear negative news.

Never mind that the learning lies in hearing both sides of a story. Emotional bias is why your attention gravitates to positive stories and believing that the next rich person could be you.

Let’s talk about the Investor that built generational wealth with soft, consistent steps and long term investor stocks. It may not be as glamorous as the ads you see, but you must read this:

The cautious investor’s long term stock investing strategy

Once, a cautious investor bought long term stocks using the share market advisory. His friends told him he was wasting his capital and youth and should not consider long term stocks investing. After all, he could be rich next year if he chose with his heart and followed the strong tips.

What the cautious investor did – with reasons:

The investor found:

  • The share market fluctuates in the short term – investing for the long term would insulate him from the short-term external fluctuations affecting the stock markets.
  • Long-term growth has always been in favor of companies with solid fundamentals –
    • their product,
    • their pricing
    • their industry standing 
    • their stock market standing
    • their investor relations
    • past performance
    • strong management
  • The capital gains tax is low for long-term investments and high for short-term investments, so there are many benefits to holding a stock for at least a year. 
  • The costs of continuous transactions add up, and every penny saved is a penny earned.
  • It is not his primary business or expertise 
    • So he would not be able to time exits and entrances at the correct time as the other investors would 
    • He would have to dedicate less time and attention to this and more to his primary profession, thus allowing him to earn more to invest more. 
    • He would not be under constant stress.

Our Investor decided to follow his mind instead and kept buying long-term investors’ stocks yearly, building share by share in solid companies with robust product profiles, proven track records, and well-rated by stock market advisories.  

Tips from the Cautious Investor – practicing long term stock investing:

In 20 years, when he met his friends, the cautious Investor had a hefty portfolio that helped him build true wealth while protecting him from the stresses and vagaries of the short-term fluctuations in the stock market.

“Well, friends…” he said, “I may not have had the fluctuating and glamorous portfolios that you have, but I think you can all see that my portfolio is the richest”, and all they could say was “, you are the King, but please share what worked for you.” 

The Investor said: “It’s vital not to follow me blindly; here are my reasons for buying long term investors stocks.”

  • Focus on your future goals, and buy long term investors stocks – it’s essential not to get sidelined by the allure of short-term speculative gains. It’s okay to be the Boring Investor. 
  • Don’t get stressed by small mistakes and second guess all your decisions. It is okay to cut your losses on a stock that is performing poorly over a long period or has solid reasons for the decline.
  • Routinely check your portfolio using the help of the share market advisory and the help of a professional advisor as per requirements. They could ask you to buy the growth, dividend, value, real estate stocks, etc., take their advice seriously, and then decide what works for you.
  • Don’t follow the trending hot tips -stay consistent, keep your eye on the long-term investment horizon, and avoid penny stocks if you don’t have the critical ability to evaluate them. 
  • Pick the strategy that works for you and stick with it.
  • Research stocks that are well-rated by the market indices and show consistent results.

We understand this strategy may not have the bells and whistles you look for with your investments, but it works. Like the tortoise in the story of the hare and the tortoise – a slow, cautious but consistent pace will see you come out ahead at the end of the race. 

Read more: About Research and Ranking

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