When it comes to creating an effective investment strategy, it is key to think about the long term. Long-term investing can hugely benefit your overall wealth so you can continue building up your portfolio for years to come.
With unpredictability, emotion, and returns to consider, speak to your dedicated financial advisor about how a long-term investment strategy can work for you and take the day-to-day stress of investment out of your life.
Riding Out Market Fluctuations
Think back to when you first started investing. The first market drop you experienced was probably stressful, and the sudden loss of value in your portfolio was likely mentally challenging to work through.
Long-term investment takes the stress out of market fluctuations.
The market naturally goes up and down, with company values attributed to any number of factors and new items of the day. When all is said and done, chances are your portfolio will have made positive gains because you didn’t react emotionally to market fluctuations.
Less Emotional Decisions
Investing can be inherently emotional. In many ways, purchasing stocks, bonds, and mutual funds are based on feelings. When the market goes up or down, it can be tempting to make an emotional decision to try to make quick gains or mitigate losses.
Cognitive bias and judgement errors play a significant role in daily trading decisions. These have the potential to impact your portfolio value negatively. Staying focused on the bigger picture rather than the minute details of day-to-day investing can take the psychological toll of investing out of the picture.
When you’re investing for the long term, riding the ups and downs of the market, and staying patient instead of reactionary, you remove your emotion from the equation.
See Compound Returns
Dividend stocks are profits distributed by companies to shareholders. Dividend-paying companies tend to be solid long-term investments because they have a proven track record of success, which is why they can share profits with investors.
An added benefit of dividends is that you can reinvest them into the same company, another company, or a fund. When you reinvest your dividends, you can increase your position within a company and continue to realize the benefits of their profit for the long term.
Automatic Good Habits
When it comes to managing your financial portfolio, it’s crucial to establish good habits that effectively add to your wealth over time.
One of those good habits is adding money to your investment account every month. Much like putting money into a savings account, adding to your investment account grows your investment into the market without worrying about where stock prices sit at any given point.
The bonus is that you still get the long-term benefits of your investment strategy and can see your money grow more organically than if you put money away every month into a regular savings account.
Reduced Tax Burden
Capital gains tax is a payment you must make to the Canadian Revenue Agency when you sell an investment at a higher value than the price you originally paid. Capital gains affect investments as well as business assets, equipment, and property like real estate.
Capital gains tax is especially tricky to manage from an investment perspective. Day trading is all about making a profit off investments on a day-to-day basis, which can increase the capital gains burden on everyday investors.
Long-term investment reduces your yearly taxable capital gains amount significantly. The less frequently you buy and sell stocks, the less your capital gains tax will be during tax season.
Get the Advice You Need
Making sense of the world of investing can be challenging. A dedicated financial advisor can help you keep track of the bigger picture and stay the course so you can realize more significant gains down the road.
Our team of financial advisors here at Qopia Financial is here to give you helpful, compassionate, and actionable advice for your investment goals. We’re on your side with your best interests at heart.
Qopia Investments is a trade name of Aligned Capital Partners Inc. (ACPI). ACPI is regulated by the Investment Industry Regulatory Organization of Canada (www.iiroc.ca) and a Member of the Canadian Investor Protection Fund (www.cipf.ca). Qopia Investments is registered to advise in securities and mutual Funds to clients residing in Alberta, Ontario, Saskatchewan, and British Columbia. This publication is for informational purposes only and shall not be construed to constitute any form of investment advice. The views expressed are those of the author and may not necessarily be those of ACPI. Opinions expressed are as of the date of this publication and are subject to change without notice and information has been compiled from sources believed to be reliable. This publication has been prepared for general circulation and without regard to the individual financial circumstances and objectives of persons who receive it. You should not act or rely on the information without seeking the advice of the appropriate professional.
Investment products are provided by ACPI and include, but are not limited to, mutual funds, stocks, and bonds. Non-securities related business includes, without limitation, fee-based financial planning services; estate and tax planning; tax return preparation services; advising in or selling any type of insurance product; any type of mortgage service. Accordingly, ACPI is not providing and does not supervise any of the above noted activities and you should not rely on ACPI for any review of any non-securities services provided by
Investment products are provided by ACPI and include, but are not limited to, mutual funds, stocks, and bonds. Non-securities related business includes, without limitation, fee-based financial planning services; estate and tax planning; tax return preparation services; advising in or selling any type of insurance product; any type of mortgage service. Accordingly, ACPI is not providing and does not supervise any of the above noted activities and you should not rely on ACPI for any review of any non-securities services provided by Qopia Financial.
Any investment products and services referred to herein are only available to investors in certain jurisdictions where they may be legally offered and to certain investors who are qualified according to the laws of the applicable jurisdiction. The information contained does not constitute an offer or solicitation to buy or sell any product or service. Past performance is not indicative of future performance, future returns are not guaranteed, and a loss of principal may occur. Content may not be reproduced or copied by any means without the prior consent of the author and ACPI.Disclosure of commissions in mutual funds in accordance with NI 81-102 (15):“Commissions, trailing commissions, management fees and expenses all may be associated with mutualfund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, theirvalues change frequently, and past performance may not be repeated”.
Managing Director of Qopia Financial / Investment Advisor of Aligned Capital Partners Inc.
Since 2012, I have been helping Canadian families with their financial planning needs, with solutions ranging from personal and corporate life insurance and living benefits to estate preservation tools. As a registered investment advisor with Aligned Capital Partners Inc., I am able to provide investment strategies that are tailored to each individual’s needs. I have earned the distinguished Chartered Life Underwriter (CLU), Canada’s premier wealth transfer and estate planning designation as well as the Certified Financial Planner (CFP) designation which is the gold standard in the financial planning industry.