As the world becomes increasingly fast-paced, it is no surprise that most of us want results in an instant, including with our investments. But expecting the immediate bang for your buck can be difficult because the market is highly unpredictable. When it comes to investing, having patience might prove beneficial. Long-term investments can help you grow earnings at a steady pace, lowering your exposure to financial risk.

What is long-term investing? 

In financial terms, long-term investing refers to a strategy focused on building wealth for an extended period—typically five years or more—by holding assets such as stocks, bonds, or real estate with the expectation of generating substantial returns over time. 

What are the benefits of long-term investing?

● Builds resilience against weather market volatility
Markets fluctuate over time. However, it is difficult to predict the market’s behavior at any given time. Investing in the long term helps you minimize losses from unpredictable market behavior, enabling you to stay the course towards your financial goals.

● Unlocks potential for exponential growth opportunities
The longer you stay invested, the higher your likelihood of achieving positive returns—especially when you consistently reinvest your earnings. This reinvestment fuels the power of compounding, where your gains generate additional gains, allowing your investment to grow exponentially over time. The historical MSCI All Country World Index, a benchmark index that represents the performance of global stock markets, found that over the last 20 years, those who had stayed invested for over a year had a 73% probability of generating positive returns. This probability increased to 89% when the investment is held over five years.

● Promotes disciplined investment decision-making
Having a long-term mindset in investing encourages a strategic focus, shielding you from making emotionally driven decisions triggered by short-term market noise. A longer investment time horizon allows you to stay focused on the bigger picture and remain calm instead of panicking over realized or unrealized declines in your investment portfolio. Keep a level head to avoid letting your emotions impact your investment decisions. 

How do you invest in the long term?

One way to invest in the long term is through a Variable Universal Life (VUL) insurance plan, an investment-linked insurance solution that combines life protection and the potential for wealth accumulation.

With VUL insurance, a portion of your premiums is invested in professionally managed funds that can potentially help grow your money. As these funds grow, the cash value of your policy grows as well. Top institutional investment managers, such as AIA Investments, leverage their expertise to strategically allocate your funds in financial assets with strong growth potential.

Remember, long-term investing may still experience market fluctuations and changing market cycles along the way. Ready to invest in the long term? Talk to an AIA Life Planner today about your options.