Ask just about any investor, and they’ll tell you that it’s smart to plan for your retirement. Yet according to recent studies, an astounding 66 percent of millennials haven’t started saving for retirement. And that’s troublesome because it is precisely this age group is who would benefit most from investing in the best stocks for long-term investment.
What’s worse, experts say that Social Security benefits may be reduced by 20 to 25 percent for those in the younger generation. That makes it even more important to look for the best stocks for long-term investment. Doing so will allow you to reap significant rewards long after you’ve drawn your last paycheck.
Should You Invest in Stocks in the Current Market?
If you watch the news and see the wild swings the stock market is taking lately, it may be tempting to wait it out before investing. However, many experts say that’s a mistake. When planning for retirement, using the best stocks for long-term investment, time is on your side.
Because of compound interest, holding money in a stock market account for the long term will multiply quickly, contributing to your ability to retire with ease. In other words, the longer you have until you retire, the greater risk you can accept.
Historically, stocks are ideal for long-term investments because they tend to perform well over time. That’s why those who have many years until retirement should look closely at the best stocks for long-term investment.
And the statistics back up this theory. Stocks declined in the 1930s but had an 18 percent average annual return in the 1950s, a 16.6 percent rate of return in the 1980s, and a 17.3 rate of return in the 1990s.
If you’re thinking about planning for your retirement, investing in the best stocks for long-term investment is one of the smartest things you can do.
What Are Some Other Investment Options?
Are you still too skittish about the stock market, even though historical statistics show how profitable the best stocks for long-term investment are? If so, you do have other options. Some people believe that diversifying your portfolio is the answer to volatility in the stock market.
If you don’t want to invest 100 percent in stocks, you have options. Here are a few ways to diversify investments while waiting until the stock market settles down.
High-performing, short-term bonds are a great way to diversify your investment portfolio, but they do have some negatives. The bond market has been volatile lately as well, so you shouldn't invest 100 percent of your money in bonds. Stocks get a higher return, so if you’re going to expose yourself to risk, you should invest where you will earn more on your investment. And that's in stocks. Also, fees are typically higher when investing in bonds, so make sure you weigh them when considering your return.
Many people who are close to retirement invest in bonds because they are safer than stocks, but in many instances, the return is lower. However, if you’re looking for the best stocks for long-term investment and plan to have your money in them for the long-haul, stocks will give you a higher rate of return.
Exchange Traded Funds (EFTs) enable investors to purchase a variety of stocks all at once instead of buying just one. It’s a great way to diversify your portfolio when you’re unsure of how your chosen stock will perform in an uncertain market.
Investors typically use EFTs as a short-term investment, so replacing the best stocks for long-term investment isn’t a permanent solution. But some experts agree that when the market is volatile, you can temporarily park your money in EFTs while you wait for it to hit bottom. Keep in mind, though, that the trading fees for EFTs are typically high.
A Real Estate Investment Trust is an investment vehicle that allows you to invest in real estate portfolios without having to purchase real property. For example, a REIT can include shopping malls, apartment complexes, beachfront property rentals, and any other number of options.
When you invest your money in a REIT, timing is everything. Some years beat the stock market while others performed considerably less. Depending on whether housing is on the upswing or downswing, a REIT may or may not be a better investment than the best long-term stocks for investment.
Stock Market Tips and Tricks for Beginners
While it’s true that you can find stock market tips from many places, the best advice for beginners is to stick with the basics. That’s because when looking at the stock market’s history, certain trends come into play. And as an investor, you’ll want to do all you can to take advantage of those trends to make the most of your investment.
The stock market is in a continual process of rising and falling, and you need to plan for the crashes. Here are some of the tried and tested tips and tricks for when you are looking at the best long-term stock market investment options.
If your best long-term stock investment portfolio is diversified, you will probably do better when the market crashes. There are a few ways to do this. You can use a robo-advisor to automatically diversify your portfolio, which will somewhat protect you during a crash. That is in contrast to putting all of your investments in a few stocks.
You can also split your investments between markets. For example, invest 70 percent of your funds in the S&P and 30 percent in lower-risk bonds.
Assign yourself a risk level
Everyone has a different level of risk tolerance, and you need to understand yours. For example, if the stock market crashes, will you automatically react by selling your stocks? Then you likely have a low tolerance for risk and may be better off in something safer. Or will you understand that the stock market inherently goes up and down, and will eventually rise?
Your risk tolerance also depends on your goals. If you are in your 50s, you won’t want a high-risk portfolio. But if you’re in your 20s or 30s, the best long-term stock investment portfolio will be high risk.
Charles Schwab offers a self-guided risk assessment that will help you determine yours.
Understand your portfolio
If you don’t know what’s in your portfolio, it will be impossible to manage — or to understand what happened in the event of a crash. Even if you use a robo-advisor or other professional, it’s important to understand where your money is. If you own a great long-term investment stock that had a bad day in the market, this knowledge could keep you from selling it when it’s better to hold.
Buy in the dip
Simple economics show that when you buy something at its lowest, you will always make money when prices rise. That’s true for the best long-term stock investments. But how do you know when it’s the right time to buy?
You can’t. If people could predict the market, there would never be losses. Yet that doesn’t mean you can’t put some common sense strategies to work. According to Forbes, people who bought during the dip saw a median 2.7 percent return for the three months following the dip. That compares to a 1.9 percent return for people who held on during the dip. Of course, buying in the dip has substantial risks, so if you aren’t willing to risk losing your investment, the best long-term stock investment portfolio might be right for you.
Look to the experts
Finally, anytime you invest in the stock market, it’s wise to hire a professional to help lead the way. You can hire a robo-advisor, a financial planner, or a stockbroker to help you make decisions. And if you want to avoid costly trading fees, a fee-only financial planner can give you advice without eating up all your profits.
The Top 7 Best Stocks for Long-Term Investment
Are you ready to get started and find the best long-term stock investment options for your portfolio? Here are seven stocks that we believe every long-term investor should pay attention to.
(TRIP) Seventy percent of millennials say they work to pay for travel expenses. It’s no secret that millennials and generation Z are different than previous generations. And that’s why it’s necessary to look to at the best long-term stock investment that the newer generations will make big.
Trip Advisor is one such company. While it took a beating in 2018, it has revamped its platform to offer better data, combined with ease of transaction when planning trips. And this generation won’t settle for less. The site says it expects the changes to result in a 5 to 10 percent increase in revenue.
Because of its sensitivity to the needs of the upcoming generations, it would make a great addition to your best stocks for long-term investment portfolio.
(CVX) Even investors who are okay with risk need to have some safe stocks in their portfolio. And Chevron is a great one. The company is known for being conservative in its spending, which has resulted in increased dividends for the past 25 years. The CFO of the company is dedicated to increasing earning, even when the market is down. Chevron adds to its value by carrying a relatively low debt load.
(BIDU) Baidu is the Chinese version of Google, and with only 57.7 percent of the Chinese population having access to the internet, its growth potential is huge. And in addition to its search engine potential, the company recently said it plans to have fully autonomous vehicles on the road by 2020. That’s next year. Some say it will be easier for the Chinese firm to tweak its driverless cars for the U.S. than it will be for Telsa or Alphabet to tweak it for the Chinese market. And that makes it a good candidate for the best stocks for long-term investment options.
(WFC) Wells Fargo underwent a fake-account scandal that rocked its market value. Even still, the bank has always been viewed as the top of its class, and many are betting it will be again as soon as the public forgets about the scandal.
And Wells Fargo is already taking measures to cut costs and add online banking services to its portfolio. It has a reputation for being a tightly-run ship, and that will help it regain its value. If you want to buy a stock when it’s down and then cash in as it rises, Wells Fargo is a pretty good bet.
(WM) This company isn’t nearly as exciting as one who develops technology that allows for driverless cars, but its returns are something to get excited about. The proper disposal of waste will always be a need, and this company performs it brilliantly. What’s more, it owns the local refuse sites, which means the city or town contracting with it would have a difficult time replacing them.
If you’re looking for one of the best stocks for long-term investment options that will build wealth slowly, Waste Management’s 2.25 percent dividend yield is a slow and steady option.
(CWBHF) CBD oil (cannabidiol) is a rising star in the alternative medical field involving hemp and CBD oil. And Charlotte’s Web is one of the leading players in the sector. The U.S. recently legalized hemp farming in the new federal farm bill, which is a positive indicator that the CBD oil craze will continue to grow.
Charlotte’s Web was recently named the number one “pot stock” to watch.
(IBM) Ask most millennials about IBM, and they’ll tell you that the company is a relic. Yet what they may not know is that IBM’s Watson supercomputer may be about to disrupt the industry. It can potentially help cut healthcare costs and improve people’s personalized medicine. With the healthcare industry in total disarray and needing a solid disruption, IBM sits as one of the best stocks for long-term investment options
What Is Your Best Long-Term Stock Investment Option?
Are you looking for the best stocks for long-term investment? Whether you’re looking for a stock that is poised to climb dramatically or one that is predicted to grow slow and steady, you should be able to find one on our list. Just remember, when investing in the stock market, it’s essential that you do your best to research your options before taking the plunge. And if you feel you need professional guidance, don’t be afraid to reach out to an expert.
Are you already investing in the stock market? If so, we would love to hear about your experiences below. If not, what’s preventing you from taking the plunge? We would love to hear about that, too!