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11 Smart Long-term Investing Tips That Could Lead to Success

This simple advice can help you as an investor for years to come.

By Chris Adam

Edited by Chris Kissell

Updated Dec. 17, 2024

Everybody wants to get rich quickly. But in truth, fast-moving, short-term approaches to investing rarely pay off. Instead, it is the patient, long-term strategy that is more likely to help you build wealth over time.

Before you start investing, take a look at these long-term investing tips that might improve your odds of success both now and in the future.

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Start early

Starting to invest early in life creates a huge advantage for those trying to get ahead financially over the long haul. The earlier you start, the more time there is for your investments to compound.

Compound interest can turn little sums of money into big piles of cash if you give the process enough time.

Don’t think you need to wait until you have a lot of money to get started. With smart planning, you can begin with a small amount and watch it grow.

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Figure out your goals

Once you have decided to start investing, think about your goals. Know why you want to build an investment portfolio and what you hope to accomplish in the long term.

For example, your goal might be something like growing money for retirement, or simply building your overall level of wealth. Once you know your goals, it will point you toward the right investment strategy for you.

Know your risk tolerance

Nobody knows your tolerance for risk better than you do. Think long and hard about whether your stomach for risk lines up with the investment strategy you have chosen.

Does the thought of losing half your money in a bear market make you feel ill? Or do you have the courage to endure such losses in the hope that you will make back the money when the market recovers?

Your answer to such questions should tell you a lot about your risk tolerance.

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Let’s say you want to invest $250, as an example.

With that amount, you could build a relatively diverse portfolio with an investment of $50 in a big tech stock, $50 in a retail stock, $50 in an energy stock, $50 in a manufacturing stock, and $50 in a bank.¹ This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice. To get stock reward, new customers need to sign up, get approved, and link their bank account. Stock rewards shares cannot be sold until 3 trading days after the reward is granted and the cash value of the stock rewards may not be withdrawn for 30 days after the reward is claimed. Stock rewards not claimed within 60 days may expire. See full terms and conditions at <a href="https://robinhood.com/us/en/support/articles/open-account-pick-your-stock/">rbnhd.co/freestock</a>. Fractional shares are illiquid outside of Robinhood and are not transferable. Not all securities available through Robinhood are eligible for fractional share orders. For a complete explanation of conditions, restrictions and limitations associated with fractional shares, see the Fractional Shares section of our Customer Agreement. Robinhood Gold is offered through Robinhood Financial LLC and is a membership offering premium services available for a fee.

Even better news? Add a Robinhood Gold membership, and you’ll get access to 4.25% (as of 11/15/24) APY² Annual Percentage Yield. Rate valid as of April 12, 2024. To earn interest, a cash balance is needed. If you have a margin balance, there is no cash balance to earn interest. Interest rates for cash sweep and margin investing can change at any time. Fees may reduce interest earnings. on your uninvested cash³ Interest is earned on uninvested cash swept from your brokerage account to partner banks. Partner banks pay interest on your swept cash, minus any fees paid to Robinhood. As of Nov 15, 2023, the Annual Percentage Yield (APY) that you will receive is 1.5%, or 5% for Gold customers. The APY might change at any time at the partner banks' or Robinhood's discretion. Additionally, any fees Robinhood receives may vary and are subject to change. Neither Robinhood Financial LLC nor any of its affiliates are banks. All investments involve risk and loss of principal is possible. Robinhood Financial LLC (member SIPC), is a registered broker dealer. and the ability to buy and sell stocks 24 hours a day, 5 days a week.

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Stick with a strategy over the long run

Many investors are tempted to keep switching strategies as market conditions change. But long-term investors are different. They are more likely to pick a single strategy and stick with it rather than chasing the latest fads.

This isn’t to say they never change their strategy, but such shifts tend to be rare and usually have sound reasoning behind them.

Don't try to time the market

Turn on CNBC or another investing channel and you are likely to hear from stock-market “gurus” who are only too eager to predict where the market is headed.

However, no one knows for sure where the stock market is headed today, tomorrow, or even for the rest of the year.

That is why long-term investors don’t bother trying to guess where stocks are going, a process known as trying to “time the market.” Instead, these investors choose a carefully considered strategy and stick with it through the market’s ups and downs.

Ignore 'hot tips'

If your aunt, co-worker, or the guy on the bus offers you a tip about a “hot” stock, you would probably do well to simply ignore it. Investing based on “tips” is usually foolish.

If you are going to dabble in picking stocks, do your own research. If that sounds like too much work, consider investing in a stock market index fund that simply captures the returns of a wide slice of the market.

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Automate your investing

Put technology to work for you by automating your investing. If you contribute to a 401(k) plan at work, it is likely that you already participate in this type of system. But it doesn’t have to stop there.

You can also automate investing through a brokerage account. For example, you can set up your account so it automatically pulls $100 from savings every two weeks and uses the money to purchase shares in a mutual fund or exchange-traded fund of your choice.

Use dollar-cost averaging

Dollar-cost averaging is at the heart of automating your investing. With this approach, you regularly invest the same amount of money week in and week out, regardless of what the market is doing.

Historically, dollar-cost averaging has helped millions of investors build wealth slowly over time. A benefit of this approach is that it ends up helping you buy fewer shares when the market is high and more when the market is low.

Diversify

Diversifying your investments can be a great way to mitigate losses. Typically, people who diversify see some of their investments gain and others lose at any given time.

Over a long period of time, this type of diversification usually helps reduce overall risk and provides you with a smoother investing experience. It might also boost your returns.

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Review and rebalance

Even long-term investors know they have to make some changes now and then. These changes are usually tied to rebalancing.

When you rebalance, you sell some investments and buy others in an attempt to keep your asset allocation at the level you established based on your risk tolerance.

For example, let’s say you begin investing with a 50/50 split between stocks and bonds. Later, you discover that over time, the balance has become 55% stocks and 45% bonds.

In such a situation, rebalancing would have you sell 5% of your stocks and use the proceeds to buy 5% more in bonds. This restores you back to the 50/50 split that matches your risk tolerance.

Keep costs low

Finally, do your best to keep fees and other costs to a minimum. Such expenses can reduce your investment returns. Over time, this can result in earning significantly less money for your efforts as an investor.

One way to keep costs low is to invest in low-cost index mutual funds or exchange-traded funds. Such funds simply track a broad market index such as the Standard & Poor’s 500. These funds typically come with low fees and offer good diversification to boot.

Bottom line

Your goal as a long-term investor is likely to build wealth and maximize your retirement savings. Following the tips on this list might help boost the odds of achieving your goals.

If you need more guidance, consider meeting with a financial advisor who can help you narrow options and build a long-term strategy that is more likely to pay off over time.

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