Invest For The Long Term With Low-Cost Equity Investing

We will explain later why you should consider primarily doing equity investing, but the point here is to just take the long-term view. Easier said than done. Your investments will almost assuredly see volatile swings over the course of your career. The S&P 500 Index saw a decline of almost -34% from Feb. 19, 2020, to March 23, 2020. But by the end of 2020, it had rebounded 68% from that March low.

This type of volatility is gut-wrenching, but remember in your case when saving for retirement you really won’t be needing this money for 30-40 years! So, embrace the volatility since in the long-term you will be rewarded by taking risks with stock ownership through higher returns.

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Please don’t be tricked into “trading” in your accounts. Major media outlets and major brokerage providers suggest that you can buy and sell investments based on their newscasts, commercials, predictions of upcoming information or a random technical chart. And this may sound appealing! You will hear stories of the major Wall Street banks recording streaks of 50+ daily profits within their trading desks before recording a loss. So why can’t you? No matter how much work you do or how intelligent you are, you will almost certainly not be able to consistently turn a quick profit in trading your investments. Wall Street banks and hedge funds have armies of economists and analysts on their research teams and the fastest technology in the world to make money on short-term market movements (yet, surprisingly enough they lose money on occasion).

You, with your laptop, will not win versus them. Find equity investments that are priced reasonably now with promising long-term growth prospects, diversify and hold your investments through the volatility. Continue to save and add to your portfolio but don’t look to get rich quick.

Another critical aspect of successful investing is choosing a low-cost provider. We will introduce you to some discount brokers later in the site (Charles Schwab, Fidelity, TD Ameritrade) that offer all of the services that the major brokerage firms will provide to our age bracket at just a fraction of the cost. Be aware of the fees being charged to you by your broker, mutual fund provider and your advisor since your success in part depends on keeping costs low! Frequently trading your account also comes at a brutal cost of trading commissions and tax implications … yet another reason to invest for the long term.


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All information included in this page and all pages throughout Young Money, Smart Money is provided for informational and educational purposes only and should not be taken as investment advice or a recommendation to invest accordingly. Investing involves risk, including a potential for a loss of principal. Educate yourself about all investments and funds you purchase, including their risks, objectives, and fees and expenses before investing. For additional assistance, please contact us or another financial professional for a more detailed review of your specific situation.

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