Define Your Financial Goals
Identify what you are investing for and estimate when you may need the money. A clear objective gives your investment strategy direction.
LONG-TERM INVESTING
Build Wealth With a Long-Term Investment Strategy
Learn how long-term investing works, why time and compounding matter, and how a disciplined investment strategy can help you work toward your financial goals.
01
Long-Term Goals
02
Compounding
03
Diversification
LONG-TERM WEALTH JOURNEY
TIME HORIZON
Invest with a
long-term mindset
Focus on your financial goals instead of reacting to every short-term market movement.
FOCUS
Growth
APPROACH
Discipline
HORIZON
Years+
LONG-TERM INVESTING AT A GLANCE
Build your investment strategy around time and financial goals
Long-term investing is not about predicting every market movement. It is about creating a financial strategy that can remain aligned with your objectives through different market conditions.
01
LONGER HORIZON
A longer investment horizon can give your strategy more time to experience market cycles and potential growth.
02
COMPOUNDING
Reinvested returns can potentially generate additional returns over time, making compounding an important long-term concept.
03
DIVERSIFICATION
Holding a mix of investments can help reduce dependence on a single asset, company or market segment.
04
DISCIPLINE
Consistent investing and periodic portfolio reviews can help keep your financial strategy focused on your long-term objectives.
TIME HORIZON
LONG
PRIMARY FOCUS
GROWTH
∞
TIME
WHAT IS LONG-TERM INVESTING?
Investing with a longer financial horizon
Long-term investing is an approach where an investor plans to hold investments for an extended period, often several years or decades, instead of focusing primarily on short-term price movements.
The strategy is generally built around long-term financial goals, such as retirement, education, financial independence, wealth creation or other future financial needs.
A long-term investment strategy does not eliminate risk. Stocks, bonds, funds and other investments can lose value. Instead, the approach considers market volatility within the context of a broader time horizon.
01
Define a meaningful long-term financial objective
02
Understand your investment risk tolerance
03
Build and maintain an appropriately diversified portfolio
04
Review your strategy as your circumstances change
WHY TIME MATTERS IN INVESTING
Give your financial strategy room to develop
Financial markets can rise and fall over short periods. A long-term approach allows investors to evaluate these movements within the context of their overall goals instead of treating every market fluctuation as a reason to change direction.
01
DEFINE
Set a Long-Term Financial Goal
Decide what you are investing for and establish an approximate time horizon for that financial objective.
02
BUILD
Invest Consistently
Regular contributions can help make investing a repeatable financial habit instead of depending entirely on market timing.
03
STAY
Manage Market Volatility
Short-term market declines can occur. A long-term investor can evaluate volatility against the overall investment plan.
04
REVIEW
Adjust When Necessary
Review your financial goals, risk tolerance and asset allocation periodically to keep your strategy relevant.
BENEFITS OF LONG-TERM INVESTING
Why investors use a long-term approach
01
Potential for Compound Growth
When investment returns remain invested, future returns may be generated on the original capital and previously accumulated gains. Over long periods, this can make compounding an important component of an investment strategy.
02
Less Focus on Short-Term Noise
A longer investment horizon can reduce the need to react to every daily or weekly market movement.
03
Consistent Wealth-Building Process
Regular contributions can turn investing into a repeatable financial habit.
04
More Time Across Market Cycles
A longer horizon allows a portfolio to experience different periods of economic and market conditions.
05
Goal-Based Financial Planning
Long-term investing can be connected directly to future financial objectives and spending needs.
LONG-TERM VS SHORT-TERM INVESTING
Understand the difference between investing approaches
Long-term investing and short-term trading have different objectives, time horizons and decision-making processes. Understanding the difference can help you evaluate which approach is appropriate for your financial situation.
FACTOR
LONG-TERM INVESTING
SHORT-TERM APPROACH
Primary Objective
Long-term wealth building
Short-term market opportunities
Typical Horizon
Several years or longer
Days, weeks or months
Decision Focus
Goals, fundamentals and allocation
Short-term price movements
Portfolio Activity
Generally lower turnover
Potentially higher turnover
Market Volatility
Viewed within a broader horizon
May have greater immediate significance
COMPOUNDING AND LONG-TERM GROWTH
Why time can make compounding powerful
Compounding occurs when investment returns remain invested and potentially generate additional returns. As the investment period becomes longer, there can be more opportunities for this process to influence the value of the portfolio.
Compound growth is not guaranteed. Actual investment performance varies, and investments can decline in value. The illustration below is designed to explain the concept rather than predict future returns.
CAPITAL
Your initial investment provides the starting base.
RETURNS
Investment performance can increase or decrease value.
TIME
Longer periods provide more opportunities for compounding.
ILLUSTRATIVE CONCEPT
TIME → POTENTIAL GROWTH
Illustrative only. Actual investment returns are not guaranteed.
HOW TO BUILD A LONG-TERM INVESTMENT STRATEGY
Create a strategy around your financial objectives
A long-term investment plan should reflect your financial goals, investment horizon, risk tolerance, income, liquidity needs and overall financial circumstances.
Determine Your Risk Tolerance
Consider how comfortable you are with investment losses and fluctuations and whether you could remain invested during market declines.
Choose an Asset Allocation
Consider how stocks, bonds, cash and other investments may fit together based on your objectives and time horizon.
Invest Consistently
Establish a contribution routine that fits your income and budget rather than relying entirely on attempts to predict market timing.
Diversify Your Portfolio
Diversification can help reduce concentration in a single investment, company, sector, geographic market or asset class.
Review Your Strategy
Review your portfolio and financial objectives periodically, particularly after significant changes in your income, goals or circumstances.
ASSET ALLOCATION FOR LONG-TERM INVESTORS
Match your portfolio to your time horizon and risk
Different asset classes have different characteristics. A long-term portfolio may include multiple types of investments, but the appropriate allocation depends on the individual investor's objectives, risk tolerance and financial circumstances.
There is no single asset allocation that is suitable for every investor. Reviewing diversification and risk exposure is an important part of long-term portfolio management.
Stocks
Stocks can provide long-term growth potential but can also
experience significant price fluctuations.
Bonds
Bonds may provide income and diversification characteristics,
depending on the type and issuer.
Cash
Cash and cash equivalents can support liquidity and near-term
financial needs.
Other Assets
Certain investors may consider additional asset classes for
diversification based on their financial strategy.
COMMON LONG-TERM INVESTING MISTAKES
Avoid decisions that can disrupt your investment plan
Long-term investing requires discipline. Several common behaviours can cause investors to move away from their original strategy.
01
Trying to Time Every Market Move
Attempting to consistently predict short-term market highs and lows can lead to frequent and emotionally driven decisions.
02
Ignoring Diversification
Concentrating too much of a portfolio in one investment or sector can increase exposure to specific risks.
03
Chasing Recent Performance
Buying an investment simply because it recently performed well can result in decisions that do not match your broader strategy.
04
Ignoring Investment Costs
Investment expenses can reduce the amount of money that remains available for long-term growth.
05
Forgetting to Review Goals
Your financial circumstances can change, making periodic strategy reviews important.
06
Making Emotional Decisions
Fear during market declines or excitement during rallies can cause investors to abandon an otherwise appropriate strategy.
LONG-TERM INVESTING CHECKLIST
Review your strategy before putting money to work
Use these questions as a simple framework when reviewing your long-term investment plan.
✓
I have a clear financial goal.
✓
I understand my investment time horizon.
✓
I understand the risks of my investments.
✓
My portfolio is appropriately diversified.
✓
I have considered investment costs and fees.
✓
I review my financial strategy periodically.
LONG-TERM INVESTING FAQ
Questions investors often ask
Explore common questions about long-term investing, compound growth, investment risk and portfolio strategy.
Long-term investing is an approach focused on holding investments for an extended period while working toward broader financial goals rather than attempting to profit primarily from short-term market movements.
There is no universal number of years that defines long-term investing. It generally refers to a multi-year or multi-decade horizon where short-term market fluctuations are considered within a broader financial plan.
Time can allow investments to experience multiple market cycles and gives potential compound growth more opportunity to influence portfolio value. Investment returns are not guaranteed.
No. A longer investment horizon does not eliminate risk. Investments can lose value, and market conditions can affect portfolio performance. Risk management and diversification remain important.
Diversification can help reduce the impact of relying too heavily on one investment, company, sector or asset class. The appropriate diversification depends on the investor's objectives and risk tolerance.
Yes. Financial goals, income, time horizon and risk tolerance can change. Periodic reviews can help keep an investment strategy aligned with your current circumstances.
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Build an investment strategy designed for the years ahead
Focus on your financial goals, understand your risk, diversify thoughtfully and give your investment strategy enough time to develop.