The Guide to Long-Term Stock Investments

The Guide to Long-Term Stock Investments

Long-Term Stock gems are what people look for but 99% of the world doesn’t know how to look for these. But, in this article, we will teach you how to invest in the long term and how to find the right stocks and I will also give my personal long-term stock pick.

The Power of Long-Term Stock Investments.

The best way to portray this is by using history as an illustrator. Let’s take Reliance Industries as an example. It was valued at 380rs in 2013 and over 10 years (2013-2023), the price went up to 2584rs. Someone who invested in this stock in 2013 would receive an investment gain of 2204rs per stock with an annual ROI of 21.13% which when compounded is a total ROI of 580%. Most people missed out on this opportunity of receiving a 580% return which is a return of 5.8lakhs on one lakh of investment.
Winston Churchill said, “Those that fail to learn from history are doomed to repeat it.” we shall not forget to learn from this incident and not invest in the market right now.

How to Invest in Long-Term?

Firstly, we would suggest having two different investment wallets (One for the long term and the other for the short term). After that, you only need two things while Investing which are:

Patience/Discipline:

You need to trust your trade and avoid making impulsive decisions based on short-term market fluctuations because every stock is bound to do both up and down and trading with emotions will only get you missed profits.

Diversification:

You need to also diversify your portfolio and invest in multiple companies rather than just one because even if one stock out of your portfolio fails due to unpredictable circumstances you can still make a significant profit.

How to find the right stocks?

Company Analysis:

It is necessary to do a complete financial and technical analysis to make a good choice in stocks. For example, The person who invested in Reliance Industries in 2013 would have done a thorough analysis of the stock in which he would’ve found that the company was reducing their debt and increasing their assets every year (Reference.) and had very good financial health. You can conduct this analysis through multiple online sources like Moneycontrol and Trendlyne.

Management Assessment:

You need to evaluate company leaders their management experience, their strategic vision for the future and the progress of the company under their management. There are multiple tools to do the same but our personal favourite is Simplywall.st.

Peer Comparison:

You should always check their performance in relevance to their industry peers (competition). If their performance in comparison to the industry is above average, it is a positive sign. Industry leaders are generally the safest bets to invest in.

SWOT and PESTLE:

Well, not all that we’re taught in school is unnecessary, I was personally taught these two types of analysis in my educational journey and found great value in them. SWOT stand for Strengths, Weaknesses, Opportunities and Threats and helps us understand the internal and external business environment of the company. On the other hand, PESTLE stands for Political, Economic, Social, Technological, Legal, and Environmental and It gives a bird’s eye view of the whole environment in the industry which means that it gives us an understanding of the factors which affect the business. After conducting both of these analyses thoroughly one has a complete understanding of the business environment which will help one make a decision.

In conclusion, we know that if you go and complete every single step given in this article, you will find the best possible stock to invest in for the long term. But we understand that it may be too much for one to do themselves and that’s why we are there for you, if you need any kind of service related to this please do not hesitate to contact us.