Investing can seem daunting but it really shouldn’t be. Here is my best advice for all investors new and old;

• Hold for the long-term

Studies have shown holding on for the long-term, even during significant down periods will build wealth. Macroeconomic/Geopolitical risk will always exist however reliable companies tend to trend upwards in the long term. Investing in the long-term will also save you money from short-term capital gains taxes.

• Less about IQ/Financial acumen, more about temperament and psychology.

I think Warren Buffett said it best:

“You don’t need tons of IQ in this business.” “You need a stable personality,” he continued. “You need a temperament that neither derives great pleasure from being with the crowd nor against the crowd because this is not a business where you take polls. It’s a business where you think.”

Warren Buffett on investing

• Beginners should start with ETFs/Index Funds/Mutual Funds before Stocks

If you have never invested, I would advise starting on buying an index of stocks before single stocks. It could better prepare you mentally. Beginners should consider starting a new portfolio like baking a cake from scratch. You have to start somewhere, starting with a large basket of stocks is a great way to begin in your investing journey.

• Savings and indexes shouldn’t be your end game

The ability to save your money is important and a prerequisite before investing, however, it shouldn’t be your end goal. Savings and fixed cash investments will not pay off in the long term. Indexes provide a nice safety net/buffer however taking on risk can pay off in the long term.

• Have an investor mentality

When you buy a stock, you are an investor of that company, so act like it. Make decisions on the fundamental news of that company and not the stock price, which may not accurately reflect the value of that company’s worth.

• Always be invested in the market or be prepared to do so

You should always be allocated in the market but have some cash reserves available when the right opportunity comes. Not being in the market, even 1 day could mean losing out on significant gains. Not all of us are cash-rich or have a six-figure income to provide us with consistent investing capital. I would consider selling stocks of companies you have less confidence in if you have stocks in mind with a higher conviction to invest in. When the stock market is “good,” or companies are hitting 52-week highs/all-time highs, that is usually the time I start building my cash reserves. When the stock market is “bad,” that’s usually when I consider buying. You need to think about your next move and the move after that. Look at investing like a game of chess.

• Stay diversified but concentrated

Stay diversified in different stocks, sectors, sized companies (small, mid, large-cap) risk allocation. Most brokerage accounts have tools to show how diversified your portfolio is. If you have multiple brokerage accounts, a good tool I use is Claritus which is a free way to track all your investments. Diversification is important, but your portfolio should always remain focused on your own investment principles.

Remember, long-term investing is a beautiful struggle. It is not a way to get rich quickly. Don’t think of buying stocks like buying a lottery ticket but a slow burn towards something great. Not investing at all? I would describe that as simply a struggle. Without investing, you could see your net worth erode in the long term.