What to Know About Investing Long-Term

February 15th, 2021 by
What to Know About Investing Long-Term

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Keep It Simple. That’s the advice on long-term investing from the famed financial guru, Suze Orman.

Orman suggests that you be in the market for the long-haul. Markets vary and it’s important that you remain in them during the low periods, knowing that soon they will be on the rise. 

She also says to keep an eye on your accounts and adjust them as needed. Retirement accounts aren’t a set and forget it. 

There are three types of accounts that Orman suggests to invest your money in.  

Index Mutual Funds or EFTs

With an EFT, with one investment you become the owner of hundreds or even thousands of stocks and bonds. This is a great way to diversify your portfolio. These types of accounts typically have low annual fees, giving you more for your investment buck.

Related: How to Find a Financial Advisor

Invest in Stocks

Orman recommends figuring out how you want to invest in each. Subtract your age from 110 and keep that in stocks. For example, if you are 40, you may want to keep 70% in stocks. 

Over the long-term stocks have the best chance to have gains that beat the rate of inflation, Orman said on her website. “And you still need to focus on the long-term.” 

She recommends putting 85% in an ETF or index funds that have lots of U.S. stocks. The remaining 15% in an ETF or index fund that owns international stocks. 

Invest in Bonds

Bonds come with a maturing date, meaning there is an end date as to when your account will no longer exist and you will have to reinvest or withdraw your funds. Most Bonds have 1, 3, or 30 years. Sometimes they have more. 

Orman says to look into the shorter terms as there is less risk for investments, giving options on how to reinvest funds. 

Related: How to Stay Organized with Your Finances

Certificate of Deposit (CD)

One huge advantage of a Certificate of Deposit (CD) is that your money is 100% guaranteed.  With a bond, there is a risk of you losing money. Like bonds, CD’s come with mature dates as well. Most have a 1, 2, or 5-year date. 

It’s recommended that you take your investment and open multiple CD accounts with different maturity dates. In the financial world, this is known as a ladder, and as the accounts mature, you can then roll them into new accounts.

 


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