How to Invest Long-Term and Build A Winning Portfolio

2021年11月17日

1. Buy 25 or more top quality companies over time

A well-diversified portfolio typically contains 25-30 company stocks, with the more stocks you own and the longer you hold them increasing your likelihood of making money. By picking your best quality stocks with stable growth with sound fundamentals, you can build a diversified wealth over time.

2. Hold those top quality stocks for 5 years or more

The shorter your investing time horizon, the more we think that you’re gambling with your investment money. A longer time horizon for building wealth allows more time for companies to work on your behalf as a shareholder.

3. Invest new money regularly

Having cash available to invest means being able to add new stocks to your portfolio without first needing to sell other stocks. Investing money from every paycheck — even very small amounts — can create a snowball effect for your portfolio. As that snowball continues to roll downhill, it keeps gaining size and momentum!

4. Hold through market volatility

Be prepared for stock market declines — and take advantage of them. The stock market loses 10% of its value about once per year on average. Declines of 20% tend to happen every four or five years. Even bigger stock market crashes, with the major indexes losing 30% of their worth, occur at roughly 10-year intervals. While market declines are never fun, your best options are to either ignore them or use those turbulent times to your advantage. When the stock market is at a low point is an ideal time to buy more of your best stocks. While a sudden or significant market decline might seem devastating today, that setback won’t matter at all in 10 or 20 years.

5. Let your portfolio's winners keep winning

Not all of our stock picks will be winners. No chance. Historically, we recommend winners 60-70% of the time. We stay invested in our winning stocks because winning companies tend to keep winning. (Remember, this isn’t like a horse race; these are actual companies.) Our highest-performing investments -- like Microsoft, Google, Netflix, Shopify, Starbucks, and Nvidia -- tend to dramatically outperform our lossmakers.

6. Target long-term returns

Investing with conviction means focusing on the long term. In the short term, anything can happen. Aim to achieve excellent returns over a 5- to 10-year period. Stock market investing is a long-term game that is best played over your entire lifetime. You can build a portfolio over time that is worth millions of dollars, just by consistently investing small amounts. We’re confident that you can win this investing game, and we’re here to help.

We believe that when investors buy at least 25 great stocks and commit to holding them for at least 5 years, they set themselves up to achieve financial freedom. Let great companies work and succeed for you as you make money with us, calmly, methodically, and over your lifetime.

Our goal is to make you smarter, happier, and richer — financial freedom forever.

- MF