Stock Investing Strategies

Stock investments

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Advantages of Long Term Investing

Long term investing can be a nice strategy of pulling money out of the stock market because it is easier to find great long term stocks and simply buy them then it is to attempt to catch every single up and down move. In fact here are a few reasons why long term investing can work so well.

1. Stocks Go Up

The major market ETFs show that over the long term yearly average stock market return tends to be around 10%. This shows us that buying a group of stable stocks in the past has been a good investment strategy, far better then putting your money into a CD.

There is no reason to believe that the long term trend of the market will change any time soon. Buying good quality companies and holding onto them has worked and will probably always work.

2. Strong Stocks do Better

One other thing that history shows us is that stocks that have above average fundamentals normally beat the yearly average stock market return. That is because if you are only investing into strong companies there is less of a chance that they will go bankrupt and more of a chance that they will grow.

Another great benefit of buying strong stocks that are undervalued is that many people attempt to buy these strong companies. The buying pressure alone helps the stock the go up.

3. Dividends

Dividend paying stocks can be very powerful because the dividends they pay out can add up over time. Basically a company pays a dividend to let their investors collect on a portion of their earnings.

Because dividends are paid out regularly, holding onto dividend stocks is a way to produce a sort of income off of your investment. If the company does go up then the dividend that it is paying off will probably go up as well. This gives it the potential to be an ever increasing income.

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