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It’s not wise to invest your money looking for short term gains.  If you have a family, a household to support, and an eye for the future, you need to learn how to invest for the long run.

Over time, I’ve learned to diversify my investments as much as possible.  While I do have money set aside for the riskier investments such as forex trading with etoro and social lending through lending club, I also look for ways to protect my assets and grow them more steadily with longer term investments as well.

Learning how to invest for the long run requires patience and planning as well as some lifestyle changes geared towards saving money as well.  Here are a few ways that I’ve worked on to invest in my future.

Invest in Your Retirement

Retirement accounts are one of the best ways to invest for the long run.  There are a lot of benefits from tax breaks to employer matching that makes a retirement account a truly great investment.

I advise starting early, particularly if your employer offers some kind of retirement benefits account.  Putting money in these accounts have several benefits.

First off, they often come out of your pre-tax earnings, so you are investing the government’s money in your own retirement.  The other benefit to this is if you are close to the lower end of your tax bracket, it can have the effect of pushing you down to a lower bracket.  I was in this situation when I first started working and it had the actual effect of increasing my take home pay while I was setting money aside for my future at the same time.

Secondly, retirement accounts often have the added benefits of not taxing you on your investment earnings until you actually pull money out of your account.  This essentially means that your earnings will be untaxed for years until you retire.  At the same time, you are reinvesting your earnings and compounding your investment.

Thirdly, many companies offer some kind of matching program.  This is free money into your retirement!  Any time you have a chance to get free money, you need to jump on it!

Invest in Value Stocks

At its most basic, this is the way Warren Buffet invests.  He picks companies in industries that he understands and then he looks for the value stocks.  These are large companies that have little debt, good revenues and are essentially undervalued.  You don’t need to look for quick growth, what you want is a long term stable investment.

These days, you have the resources to really scrutinize companies before you invest in their stock.  All the information regarding their debt to value ration as well as their revenues and earnings are available online.  I recommend checking out Google Finance, which provides a wealth of information.

Invest in a Home

I know that real estate hasn’t been the best investment in recent years, but I still think it’s a great long term investment.  The problem with the recent real estate bubble is that too many people lost sight of the long term nature of real estate and tried to buy for the short term.  This is a huge investment to purchase on a gamble.

However, if you have an eye to the future, and plan on keeping your property for years to come, it’s a great investment.  This is particularly true when you buy your own home.

When you rent, you are essentially paying somebody else’s mortgage.  All that money is going into somebody else’s pocket.  However, when you own, your mortgage is going into the equity of your home.  (Minus interest)  You are paying yourself.

That is money that you will have in the form of your house 30, 40, 50 years from now.  In the future, if you need cash in an emergency, the money is available through a second mortgage or equity loan.

Also, over the long term, you can generally expect that your property values will increase.  If you are planning for the long term, you don’t have to worry so much about the temporary bubbles and price adjustments.  You can simply ride these out.

Stay Away from Get Rich Quick Schemes

This isn’t so much an investment as a lifestyle change.  However, I find so many people get caught up in the mentality of trying to get rich quick that they don’t put effort into a long term plan.  The reality is that making and saving money is a lifestyle.  It’s not about getting rich quick.

Just think on all the stories of the lottery winners, professional athletes, or entertainers that end up broke a few years after their windfalls.  It’s because they never learned to adjust their lifestyle to investing for the long term.

It’s easy to get caught up in the revelry of getting rich quick.  I’m of the firm belief that getting rich quick won’t help me stay rich.  The way to keep my money and ensure that I have a strong financial future is to plan and learn how to invest for the long run.

With this philosophy in mind, I personally do my best to stay away from get rich quick schemes.  I think these schemes play on one’s emotions and it gets easy to get caught up and then end up losing it all.

Also, secondarily, I think that people value things that they earn more than they value things that are given to them.  I’d rather earn my wealth than have it handed to me.  I think I have a greater chance of keeping the wealth that I earn.

Diversify

This doesn’t mean that you need to limit yourself financially.  While I have lots of long term investments, I also practice many different ways to save.  Just take a look at my article about alternative ways to invest besides a savings account.  I personally practice all of those methods, including alternative investments such as social lending and forex trading.  I would say that having a long range strategy and philosophy can even help with your success in these short term riskier investments.

The key benefit of diversifying is that you lower your risk in any one investment and you increase your overall gains by averaging in the gains from your riskier investments.

Also, I think it’s good to learn about different ways to invest and make money.  This way you are expanding your horizons and keeping up with the latest methods.

Through diversifying, I’ve learned how to make money online, invest my money through the internet, invest in foreign currency, invest directly with people, as well as my retirement, the stock market, mutual funds and I’m learning more daily.

The key to successfully diversifying is to also take a long term approach with your new investments.  Take the time to study and learn how to invest wisely in whatever method that you decide to use.  The research and study will pay off for you in the long run.

Even though I am investing in a wide variety of methods, I take the time to learn as much as possible before I invest my money.  Generally, my investments have paid off, even in the riskier arenas.  This is mostly due to taking the time to thoroughly learn how to invest in each area before I put my money in.

Learn How to Save Money

As my final point, every goes by the wayside if you don’t learn how to save the money that you earn.  You can invest wisely and make millions, only to squander it all away if you are not saving your earnings.

You don’t need to deprive yourself or live in squalor in order to save money.  I personally have found ways to cut on my telephone bill, television bill, groceries, daily living expenses, etc… but I feel like I haven’t missed out on enjoying life.

As long as you take smart strategies to save money, you don’t need to go to extremes.  You can read about some of the changes that I made to save money without having to deprive myself.  I practice all of the money saving tips in that article and more, while still enjoying life.

Small things such as cutting the cord on cable or satellite television can save you hundreds.  At the same time, you can still watch all your regular programming through the internet.  You can do the same by switching your phone service to voip.

Using cash the majority of the time has really made me cut down on impulse buying.  Having that discipline has saved me hundreds each month.

I make an activity out of eating in by picking a new recipe to cook each week.  It’s fun and I can make a gourmet (sometimes) meal for a fraction of the cost.

Final Thoughts

Learning how to invest for the long run isn’t just for financial planning.  It’s an overall lifestyle to help you plan for the future.  It’s good to take the long view of things overall.  In the meantime, you can improve your finances along the way while you future proof your life.

About Richard  (301 Posts)

Richard is a full time professional, husband, father and blogger juggling all the responsibilities of life and running a blog. Richard enjoys writing about life and online money matters.