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8 Simple Long-Term Investing Tips and Strategies For Beginners

8 Simple Long-Term Investing Tips and Strategies For Beginners
Diana Star Apr 7, 2019
Want to Earn Some Extra Money?

When investing in the stock market, there are no guarantees for success. There’s a huge possibility that the value of your money could either rise exponentially or fall miserably.

However, if you’re going to go on with it, it’s best you invest for a maximum of five years. Why so? Well, the longer you invest, the more time you have to ride out all the bumps along the way.

With a little extra effort, patience and the following these long-term investment tips, you’ll elevate yourself from a mere beginner to a full-blown investor. Keep in mind that the road to success is usually very rough.

1. Steer Clear from Reckless Gambling

Never (and I mean NEVER) gamble your hard-earned cash on nerve-wracking and unpredictable markets. Most newbies in the realm of long-term investing often mistake investing for gambling.

To be fair, most investment decisions look quite similar to gambling. Investing is a means for you to achieve ownership of a certain asset that has the potential to double in value over time. In most scenarios, this particular asset provides somewhat of an income as you wait.

Retirement savers should know that going all in is a risky move that should only be left to the gamblers.

Once gamblers have their way with the money they put on the line, they get heftily compensated at times; while in other instances, they’ll walk away with nothing in their pockets.

Instead of going all in once the stock market reaches an all-time high, just stick to your plan. Hardly does the market stay up forever.

You’ll find it worth the while when you stay focused on your time horizon, risk tolerance, and investment objective.

Rebalance your funds and stay diversified to ensure that you’re not excessively exposed to a single asset class.

However tempting it may be to tune up your risk level once the market moves up, just remember that the same markets can shift direction quite fast.

2. Be Mindful of the Tax Deductions Associated with Long-Term Investing

As a newbie investor, you may probably not be aware of the numerous investment tax deductions that you may qualify for.

Deductions such as these will lower your overall tax burden by a significant percentage. At this point, reaching your individual investment goals will be relatively more straightforward. The following are some of the fees that are bound to be deducted throughout your long-term investment journey:

Legal Fees

Legal fees are exclusively tax deductible for businesses that deduct business fees, including those incurred in the establishment or running of a limited partnership, limited liability company, etc.

Long-term investors will be issued with a K-1 statement along with their share of the tax deduction allocation.

Legal fees of this kind are entirely tax deductible. Additionally, they are also not subject to Alternative Minimum Tax.

Interest cost in regards to investing activities

Investment interest expense is allowed a deduction by the Internal Revenue Service. The investment interest in question is inclusive of the margin interest expense you pay to cater for purchasing stocks, bonds and other forms of investment.

To get a deduction on this particular tax investment, there are strict rules that you must fully adhere to. For one, you only need to deduct investment interest expense only up to your net investment interest’s limit.

Accounting Fees

Tax preparation fees are often tax deductible. The only downside is that most new investors don’t qualify for the deduction.

The rules are highly similar to the investment advisory fee tax deduction. Fees in excess of 2% of your adjusted gross income are the only ones that can be considered for deduction.

As always, before undertaking any drastic action, it’s always a good idea to consult your qualified tax representative to assist you to understand, calculate and weigh your options depending on the circumstances, situation, opportunities, and other related factors.

3. Consider Investing in High-Potential Sectors

If you wish to beat the stock market averages in the long-term, simply invest in sectors that have the highest growth potential.

In the long run, such sectors will grow faster than the overall economy. The best way to achieve and maintain focused exposure to these sectors is via sector funds.

There are a number of ways to choose the best sector funds for the long term. It doesn’t take a year’s worth of research or incredible luck to figure it out.

The following are a couple of the best types of sector funds you should consider purchasing for the future:

Health Care

The health care sector is bound to do significantly well in years and decades to come. This could mostly be due to the swift advances in the biotechnology field and an ever-growing population. There’s no denying the broad nature of the health sector.

Even if you have no investing experience whatsoever, you can easily come up with a particular area within the health industry like biomedical companies, drug manufacturing, institutional servicing and so on.

Even when all other sectors are performing poorly as a result of harsh economic conditions, the health industry has the potential to perform surprisingly well.


We are living in a time when technology is an essential part of the Information Age and a key factor in modern-day innovation – one that is sure to last for decades to come.

There’s a wide category of technological businesses that lie within the technology sector.

Some of them include business data processing, electronic and software companies, computer manufacturing and so on.

Today, the technology sector is worth billions. In a few years, this number may gradually multiply for the better.

 Financial Services (Financials)

This sector is composed mainly of credit card companies, banks, brokerage firms, and insurance companies.

Similarly to the health industry, financials are bound to benefit significantly from what’s known as the ‘baby boom’ generation.

As their parents move on to the next life and leave them their life savings, Millennials are expected to receive the largest and most historic wealth transfer. Financial firms expected to benefit include insurance companies, brokerage firms, and banks.

Before purchasing sector funds, be sure to exercise a great deal of caution. As it is, these three specific sectors have higher levels of market risk as a result of volatility.

Excessive exposure to a single sector, more so in short-term market timing, may greatly jeopardize your portfolio.

4. Never Invest all Your Funds in a Single Stock

No matter the situation or how good or sweet the deal is, NEVER invest your money in individual stocks. Unless you already have your head in the stock market business, then that’s OK.  Publicly-owned companies are specifically suited for the more experienced institutional investors.

All signs are pointing to a surge in the stock market. For this reason, most investors are weighing their options on whether to spend big bucks into a single stock.

This may work out as a means of recovering their losses in past years. While this can pay off for most investors, the same can’t be said about a newbie investor.

In such cases, the first thing you must do is put into consideration the impact your investment would have on your long-term financial goals.

If this stock in question were to drop down to zero, how would it affect your plans, or even worse, your emotions?

In general, there are limited reasons as to why you should consider a single concentrated position.

As much as possible, try to diversify as much as you can. It’s essential for any new investor to avoid spending up to 10% of their liquidity as an investment in one stock.

On the other hand, if you’re intent on putting a large amount of capital into a stock you’re certain will give you added benefits in the future, ensure you’re well-diversified elsewhere.

Practicing diversity will enable you to minimize the negative outcome in case your investment on the single stock doesn’t pan out as you hoped it would.

And finally, prior to taking your position in the market, it’s important to have a clear vision of your rate of return and your maximum loss as well.

The moment you’ve established your preferred items, go ahead and set your target and entry accordingly. If there has been a crash in the stock market recently, just look at it as a good chance to pick quality stocks all at a discount.

5. Have an Expert By Your Side at All Times

Investing in the long-term can work out for you just fine; just as long as you have an expert to advise you appropriately.

New investors need to listen intently to the advice of their personal financial investors. You also need to be judicial and prudent in where and how you make the necessary investments.  Whenever you feel that a sudden move needs to be made, it should never be done in a hurry.

If you have a clue of what you’re doing and your financial advisor approves of your next move, you can work together to do what either of you does best.

Of course, as with every other advisor, there are always fees to be paid and they’re often too high. Your money is in good hands with these individuals who have ensured the success of well-known firms.

As a beginner, you may not be aware of all the vital information that’s needed to decide your next financial decision.

Unsurprisingly, your financial advisor doesn’t know everything either. Since they’ve been in the game for years, they stand a better shot at coming up with legitimate strategies more than you do. Therefore, paying them for their services is one of the smartest moves you can make.

Often, beginner investors in need of a financial advisor can’t really afford one. If you’re a middle-class beginner investor seeking to find a worthwhile financial investor, here are a few tactics to find the perfect one for you:

  • Find a complete listing of financial investors whose services are mostly directed to the middle-class at
  • Another cost-effective option would be to put into consideration an automated portfolio management service.
  • While you may be fully aware of certified financial planners, try having an accredited financial counselor to give you all the advice you may need.
  • To avoid getting yourself netted in a web of scams, make sure you verify everything you find on your financial advisor of choice.
  • If your friends or family are in a similar tax bracket as you, they could help you a great deal in finding suitable recommendations.
  • Rather than looking far and wide for a financial advisor, settle for one that’s relatively close to you. He or she will be able to advise you according to the stock market’s performance of your particular hometown.

6. Investing Via a Fund Could Be Worth Your While

A number of new investors are resorting to investing in the long-term via funds. Compared to buying shares, funds are a relatively safer route.

Fund investments are a collective effort among you and other investors – you basically put something into it based on your financial ability.

In this fund, you’ll buy units that have the potential to either rise, fall or maintain their price. Multiply the price of each individual unit within your fund with the total number of units and the end result will be the value of your investment.

Most funds are centered around a particular theme that forms the basis of all the investments. The theme of most funds typically revolve around:

Investment type – gilts (government bonds), corporate bonds, and shares

Industry – industrial businesses, green companies, and utility firms

Company size – how small or how big the company is

Geography – emerging markets, Japanese or European

The risk factor is mostly determined by the combination. If the fund focuses on emerging markets, for instance, the elements in question will ride on a high level of uncertainty.

If everything falls into place by chance, you’re in for some massive profits. On the other hand, if things go south, expect some massive losses.

The most affordable route for investing in a fund is using what’s referred to as a ‘fund supermarket’, simply known as platforms.

Every platform is visible online, with some going as far as having apps to sort out each of your investments with ease.

When talking of actively managed funds, they are not managed by a single individual, but by an expert fund manager.

Just because a fund is highly successful at the moment, it doesn’t mean that it will stay that way in the future.

You will have to pay your fund manager to research and make all the decisions in relation to buying and selling the funds. In the end, you’ll be assured of a better return.

7. Choose the Right Investment Fund

Since you’re going to be investing in a particular fund for the long term, it’s best if you don’t make some costly mistakes that you may end up regretting and beating yourself up.

Settling for a particular investment fund may turn out to be a rather complicated decision to make. How right or wrong you are in your decision will have a lasting impact on your cash.

Begin by assessing your savings goals. What do you, as an individual investor, seek to achieve from it? For instance, you may be planning for retirement, saving up for the rainy or even planning on paying for your little one’s education.

Either way, having a lucid plan on where you’re channeling your income will make a noticeable difference to your success.

It will also motivate you to continue saving and decide on the risk(s) you’re willing to take with that money.

Once you’re clear on your goal, the next thing to consider will be how fast you can achieve it. Think about whether you need the money in the next 5 years or 20 years.

The more stretched your time frame is, the higher the risk you can take. Considering you have more than enough time to fully recover from a few losses here and there, you’ll be able to make more rational decisions as you go on.

Speaking of risk, how much of it are you comfortable taking? It’s never easy to watch your investment value move down especially in today’s volatile market.

That’s why you should make up your mind at the outset just how much risk you’re willing to take.

Once you’re aware of how much you stand to lose in the short-term, you’ll be more cautious when you put the long-term into consideration.

8. Make Use of the Best (and latest) Investment Apps

Today’s world of technological advancements has provided a number of solutions to everything from grocery shopping, money-tracking and now, investing.

With the ever-increasing number of new investors, developers have spent their time and money in coming up with the best investment apps to make the beginner’s journey through long-term investment fairly easier.

Investment apps are not for beginners alone; experienced investors also find good opportunities to improve their portfolios as well as save money by using the right app.

With the following investment apps, you can now use your phone to trade stocks instantly at extremely low costs or at no cost at all:


Stash is perfect for beginner investors seeking to build a diverse and impressive portfolio. This app assists investors with limited experience to make the best investment decisions for themselves.

For this reason, it comes complete with helpful educational content to suit your individual investment preferences.

If you’re to speak the investors’ language, you must start from somewhere. Stash would probably the best place to learn all the phrases, acronyms and terms to help you broaden your knowledge and fit in with other investors.


Buying and selling stocks has never been easier. Stockpile offers a unique approach to purchasing fractional shares of almost every company. In addition to all trades being as little as 99 cents, there are no monthly fees whatsoever.

Stockpile is keen on nurturing kids or young adults into the complex world of long-term investment. It offers ETFs, single stocks and a thousand other investments.

You can alternatively fund an account using a gift card that rewards the lucky recipient stock shares starting from $5.


This app is essentially an online no-frills stock brokerage. If you’re attracted to the idea of getting into the stock market or empowering others to do the same, Robinhood is a free app that enables you to make stock trades at no cost at all.

‘Free’, in this case, doesn’t mean there are hidden costs once you’ve downloaded it.

The moment you download this app, you can connect it to your individual bank, fund your account and proceed to trading for free.

The only time you’ll be required to part with your money is when you’re upgrading to Robinhood Gold.


Automated investing is made even better with Acorns. If you prefer not to think deeply about your investments but wish to contribute regularly, this app should be on your phone.

Just link your debit or credit card to Acorns and it will do a quick round-up of all your transactions to the next dollar.

With Acorn, you can automatically invest all your funds in one out of five ETF portfolios that are professionally managed.

Investing a dollar or two can quickly add up; that’s why Acorn makes it easier to invest regardless of your account balance.

Final Thoughts

Long-term investing requires you and every other beginner investor to make fully informed decisions based on the likely outcomes of whichever path you choose to take.

In other words, make it a point to adopt a long-term thought pattern. However enticing short-term profits may be, long-term investing ensures lasting success and even greater profits.

The stock market peaks as it also crashes – that’s no secret. Stock market investments, be they in the short-term or long-term, can be compared to roller coasters. As long as you don’t jump off in the course of the ride, you definitely won’t get hurt.

To succeed in the stock market, you don’t necessarily need to have Jeff Bezo’s bank balance. With a couple of dollars in your account and some pretty good advice, you’re well on your way to becoming the next big thing.

It doesn’t matter what your peers, friends or family think about your decision to invest in the long-haul. Anyone – even you – can become an excellent long-term investor.

Diana Star

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