If you are looking to maximize your portfolio returns, then you need to utilize some good long-term investment options like dollar-cost averaging and a compounding strategy

Virtually all Successful Investors take a broad view, and apply everything they know to their investing decisions, including the use of sound long-term investment strategies.

Are you interested in good long-term investment options? Over long periods, the total return on a well-diversified portfolio of high-quality stocks runs to as much as 10%, or around 7.5% after inflation.

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Good long-term investment options recover more quickly from market downturns

Of course, even the best stocks will still suffer in a deep market downturn, like the one we went through in 2008/2009. Some may also suffer in the shallower, shorter downturns that come along more often. But most recover more quickly when the market revives, as it always does. In fact, stocks like these may lead the inevitable market recovery.

These are the kind of stocks we put in our clients’ portfolios at Successful Investor Wealth Management. Though we think they are worth holding on to indefinitely, we keep an open mind. After all, they are subject to the usual risks. Competitors can overtake them. Expected contracts can fall through. They can lose key employees, run into union or regulatory problems, and so on.

Of course, nobody can predict the future. We’ll change our view and sell some as time passes. We’ll give up on some way too early, and hang on to others way too long. But if you focus on stocks like these, you greatly improve your odds of success. The best of the bunch will offset your losses and leave you with highly satisfactory long-term returns.

One of the best long-term investment strategies

Taking advantage of a compounding strategy can be considered one of the best long-term investment plans. This tip is especially important for young investors to learn. Benefits apply to both stocks and fixed-return, interest-paying investments like bonds. When you earn a return on past returns, including reinvested dividends, the value of your investment can multiply. Instead of rising at a steady rate, the number of dollars in your portfolio will grow at an accelerating rate.

At the same time, pay attention to steady drains on your capital, even seemingly small ones—like high brokerage commissions. If you’re losing (or missing out on a profit of) even 1% a year, it can have an enormous draining effect on your investments over a decade or two.

Good long-term investment options can include a conservative approach to investing

Value investors typically have long-term mindsets when it comes to investing.

At the core of the value investing approach is the ability to identify well-financed companies that are well-established in their businesses and have a history of earnings and dividends. They are likely to survive any economic setback that comes along, and thrive anew when prosperity returns, as it inevitably does. At the same time, they are cheap in relation to these measures.

Virtually all successful investors have some understanding of value investing, many have some knowledge of technical analysis, and most have some knowledge of a variety of other tools and shortcuts that can point out stocks worth looking at more closely.

Another key point about value investing is you shouldn’t sell high-quality stocks just because their prices have dropped. Nor should you sell them just because they’ve gone out of investor favour. Well-established, but out-of-favour stocks, can provide great opportunities for patient investors.

Good long-term investment options for retirement savings

When it comes to retirement, you should be long-term focused, which takes a lot of the guessing and game playing out of the equation. The best retirement plan you can have is to start saving as early in your working career as possible. You then invest a steady or rising amount of that money in the stock market every year. When you follow this plan, you automatically profit from dollar-cost averaging. You will automatically buy more shares when prices are low, and fewer shares when prices are high.

Additionally, Registered Retirement Savings Plans (RRSPs) are a great way for investors to cut their tax bills and make more money from their retirement investing. RRSPs are a form of tax-deferred savings plan. RRSP contributions are tax deductible, and the investments grow tax-free.

When you later begin withdrawing the funds from your RRSP, they are taxed as ordinary income.

If you want to pay less tax on dividends while you’re still working, investing in an RRSP is the way to go.

Good long-term investment options should include our three-part Successful Investor approach

Long-term investment strategies aren’t built by aiming to make a fast dollar, or by profiting from inside information. They are built over time, and most importantly, by learning how not to repeat the market mistakes of the past.

You can improve your returns and cut risk if you structure your retirement investing around our three-part approach at TSI Network. Invest your money mainly in well-established, dividend-paying companies. Spread your investments out across most if not all of the five main economic sectors (Manufacturing & Industry, Commodities & Resources, Consumer, Finance, and Utilities). Downplay or avoid stocks in the broker/media limelight.

What are your preferred long-term investment options?

What is the biggest mistake you’ve made with a long-term investment?