Are You Really A Long-Term Investor?

FINANCIAL FOCUS

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Many Payson area residents have been investing for a long time. Therefore, they consider themselves to be long-term investors. But are they?

Real long-term investors aren't necessarily those people who have been investing for many years or those who have their eyes on distant goals -- although those two elements are important.

True long-term investors share several common traits. Consider some of them:

  • They own the same investments for many years. Investing is not a risk-free endeavor and your investments will have their "ups and downs." But long-term investors choose quality investments and stick with them through good times and bad.
  • They don't deviate from their strategy. Long-term investors establish a strategy based on their individual needs, goals, preferences, risk tolerance and time horizon. Then, once this strategy is in place, they follow it steadily through the years.
  • They invest in companies not stocks. Successful long-term investors pay little attention to day-to-day (or even month-to-month) shifts in stock price. Instead, they focus on the companies themselves, and they ask the right questions: Is the management solid? Does the company have a sound business plan? Are its products competitive? Does it belong to a healthy industry?
  • They don't listen to "hot tips." Long-term investors do whatever they can to avoid expensive mistakes such as chasing after "hot" stock tips.

Unfortunately, many of these hot tips turn out to be not so hot. And even if a stock was hot at one time, it might already have cooled off by the time an investor acts on the tip. But more importantly, long-term investors know that not all stocks are appropriate for their individual needs.

Consequently, they train themselves to take a pass on today's hot stock tips.

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