A quote credited to Titus Maccius Plautus, a Roman comedic playwright, resonates with today’s investors: “In everything, the middle course is best; all things in excess bring trouble to men.” Striving for balance is the ultimate objective in long-term investing. As needs evolve over time, strategies that may work one year can prove ineffective or costly the next.

U.S. News sought insights from experts on some of the most robust investment strategies applicable throughout your life. Here’s an overview of 10 effective long-term investment strategies:

  1. Commence Early.
  2. Diversify Extensively.
  3. Stay Committed.
  4. Adhere to Your Target Asset Allocation Framework.
  5. Maintain a Balanced Cash Position.
  6. Consider the Impact of Taxes.
  7. Opt for Low-Cost Index Investing.
  8. Diversify Your Income Sources.
  9. Review Your Strategic Allocation to Fixed Income.
  10. Evaluate the Aggravation-Adjusted Rate of Return.

Commence Early: Starting your investment journey as early as possible is a widely endorsed strategy, as emphasized by Ryan Burke, General Manager of Invest at M1. The power of compounding is formidable, making the timing of your investment initiation crucial. Waiting an extra 10 years to start investing could significantly impact long-term returns.

Diversify Extensively: Maintaining a diverse portfolio is crucial, as highlighted by Chris Dhanraj, Managing Principal of Investments at CliftonLarsonAllen. Sector concentrations can be beneficial during market rallies but burdensome during downturns. Diversification across sectors, factors, and geographies mitigates volatility and enhances goal achievement.

Stay Committed: The real adversary for long-term investors is the inclination to time the market. Staying invested, even during market fluctuations, ensures participation in both challenging and rewarding periods, ultimately contributing to overall performance.

Adhere to Your Target Asset Allocation Framework: Jim Gubitosi, Co-Chief Investment Officer at Income Research + Management, underscores the importance of maintaining a target asset allocation through market fluctuations. Markets can behave irrationally, making a calm approach crucial. Understanding your time horizon, liquidity needs, and risk tolerance aids in setting the right asset mix.

Maintain a Balanced Cash Position: Katie Nixon, Chief Investment Officer at Northern Trust Wealth Management, recommends being the “Goldilocks of Cash.” While a cash reserve is essential for market stress, excess cash can be detrimental. Strategic allocation of cash in a portfolio considers short-term needs and long-term objectives.

Consider the Impact of Taxes: Andy Watts, Certified Financial Planner at Avantax, emphasizes that taxes are a significant expense. A tax-intelligent financial plan, optimized to achieve goals and minimize tax burdens, is crucial. Asset location, in terms of tax-sheltered accounts, aids in minimizing taxes.

Opt for Low-Cost Index Investing: To enhance long-term returns, Harry Grand, Head of the New York office for Angeles Wealth Management, recommends investing in low-cost index funds or ETFs. This strategy offers instant diversification and tends to outperform actively managed funds over the long term.

Diversify Your Income Sources: Chris Blunt, President and CEO at F&G, emphasizes diversifying income streams during retirement. Including insurance products like annuities can protect against longevity risk, providing a reliable income for life.

Review Your Strategic Allocation to Fixed Income: Capitalizing on rising yields today by locking them in for the long term is a strategy suggested by Robert Tipp, Chief Investment Strategist at PGIM Fixed Income. Revisiting the allocation to fixed income amidst elevated interest rates can potentially yield mid-to-high single-digit returns over an extended period.

Evaluate the Aggravation-Adjusted Rate of Return: Miles Nadal, Founder and Chair of Peerage Capital, introduces the concept of the “aggravation-adjusted rate of return.” Beyond traditional metrics, considering the potential aggravation attached to an investment opportunity is crucial. Ensuring that results justify challenges and sacrifices is paramount for patient and enduring investments.

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