As newlyweds, planning for the future can be incredibly exciting. For many couples, long-term investing is part of that equation. If you want to make sure you approach the situation properly, here are six long-term investing tips for newlyweds that can help.
1. Invest Consistently
The stock market will always have periods of ups and downs. However, if you’re goal is to invest long-term, you don’t want the occasional sway to alter how much you save. Instead, remain consistent, socking money away on a set schedule. That way, you take advantage of the lows and aren’t hindered by expensive highs. In general, stocks do better than bonds, and bonds do better than cash.
2. Get the Risk Right
Risk is a hot topic when people talk about investing. Risk means a lot of things, but in a nutshell, risk is risk of asset price changes -or your investments losing money. Ideally, you want to determine how much risk you’re comfortable with early, allowing you to craft a portfolio that makes sense for you.
In many cases, this means coupling bolder moves with safer bets, especially if time is on your side. That way, you can bring some growth stocks into the mix without introducing too much risk overall.
3. Diversify Your Portfolio
Diversification is your friend when you’re investing for the long term. By having a wide range of investments, issues in a single sector won’t torpedo your entire portfolio. Instead, strong performers will prop up weak areas, giving you a type of safety net by making sure you don’t have all of your eggs in a single basket.
4. Try Funds
If you’re new to investing, starting out with index funds, mutual funds, or real estate investment trust (REIT), exchange-traded funds (ETFs) can be a smart move. Each of these investment vehicles actually represents numerous stocks or bonds, giving you an inherent level of diversification without having to purchase several different assets. Plus, they tend to be less volatile naturally, which can make your first steps into the world of investing more comfortable.
5. Add Target-Date Funds
While target-date funds are also made of many stocks and bonds, they also have an added benefit; the mix of investments shifts over time. As the target date draws nearer, the investments in the fund skew more conservative, safeguarding what you’ve already set aside to a degree. This can make it a great option for couples who want to adjust their risk as they age but would prefer a more automated approach.
6. Keep the Winners, Sell the Losers
When you see an investment’s value rise, you might be tempted to cash in and grab that money. The issue is, if you’re investing for the long-term, you may be exiting an investment that has more potential for growth. If that’s the case, selling now is a mistake.
However, investors may also try to hang onto losers hoping they’ll recover. While that can be wise if there are legitimate reasons to think the investment will bounce back, if you don’t see any reason to assume a positive outcome, it’s better to take the loss and get out. That way, you won’t risk additional losses. Plus, you can redirect the funds you preserved to something with more potential.
Do you have any other long-term investing tips for newlyweds that couples should know about? Share your thoughts in the comments below.
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