Investing in stocks and other financial assets can be a true rollercoaster. Market fluctuations are not uncommon, and there can be some rough years ahead before things will turn bright. What does the market teach us? In the long term, there is always growth ahead of us. A good example that illustrates this is the S&P 500 index, which continues to rise over decades. In this article, we will look at some investment tricks for people who have long investment horizons and are formulating their investment strategies.
Why is long-term stock appreciation sustainable?
There often is a misconception about the concept of growth. Nowadays, lots of people try to shine a negative light on the continuous ‘growth mindset’ that has been driving capitalism over decades. They point to specific elements in the economy such as oil and gas and cheap (plastic) products that need to be replaced often. These, according to skepticism, are the product of the growth mindset. Companies want to make quick bucks and do not think about the long-term.
What stock growth actually should mean
While this can be true for some of the manufacturers, growth should not be associated with these practices. Growth, in essence, refers to the growth of the economy in GDP. This can be realized in many ways. The most important one? Technological innovation. When we become more productive and efficient, we can produce more effectively (and cheaper). This will result in better returns and allows us to focus on the next big thing.
Technology drives growth, growth drives innovation
This has been the key driver of the incremental innovations we have seen in the IT space. A good example is a shift towards cloud services by today’s organization: instead of having their servers, companies are moving to providers and software vendors and rely on them. This is not only more efficient but also results in more sustainability as only the resources that are used will be made available.
How can this help you?
Now that we know that technology drives growth: what can we expect from the future? You might have already guessed it: growth! You do not have to be afraid about potential market crashes, as long as you continue to invest and diversify. A good way to do so is by investing in index funds that cover large portions of the market.
Try to stay on course with a stock tracker
One of the ways to understand your situation is by using a stock tracker. These applications allow you to connect with your broker(s) and to have a full view of your portfolio. Equipped with detailed analytics, news, and push notifications, they can help you guide the realm of investing.
Track investments with caution
Although the concept of an investment tracker sounds appealing, you should approach the topic with caution. If you are aiming for a long-term investment strategy, you should not be bothered by daily fluctuations. A stock tracker does provide you with insight into these fluctuations. Therefore, it makes sense to set push notifications so you only receive information when it matters (e.g., important news, big market changes). When this happens, consider it as an investment opportunity, and do not try to cash out. This will probably make you lose in the long term. Stay in your game and continue to periodically invest.