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Long-Term Passive Growth Investor
Overview of your Investing Style
Long-term passive growth investors focus on holding stocks for the long-term rather than actively trading and looking for short-term profits. This strategy of investing typically involves buying fundamentally strong stocks that have a history of steady growth over time. Investors who pursue this strategy are willing to take a longer timeline to achieve their investment goals, usually aiming for larger returns over a longer period of time.
The major benefit of long-term passive growth investing is the potential for larger returns over time. Additionally, this strategy allows investors to avoid paying excessive fees or commissions that may be associated with actively trading stocks. Finally, by focusing on long-term investments, investors can also benefit from diversifying their portfolio and reducing the risk associated with short-term market volatility.
Advantages of Long-term Passive Growth Stock Investing
1. It Doesn't Take A Lot Of Time
The main advantage of this investment strategy is that it does not require the same level of time and effort as active trading.
Once systems are all set up in place, it can take as little as 1 hour per week to maintain. This is ideal for those who have busy lifestyles or prefer a more hands-off approach to their investments, such as:
- Farmers who spend most of their time out in the fields
- Busy professionals who don't have the time or energy to actively trade stocks
- Business owners who want to focus their time and effort on their business
- Anyone with a long-term investment outlook
2. Lower Transaction / Brokerage Costs
Long-term passive growth investors also benefit from lower transaction costs, as they only need to buy and hold stocks instead of constantly trading.
On top of that, if you're in Australia, you'll be able to take advantage of the 50% Capital Gains Tax discount on long-term investments held for more than 12 months (make sure to check with your accountant if you qualify).
This can save significant amounts of money in the long run, especially if you're investing a large amount of capital.
3. Less Impact of Market Volatility
Long-term passive growth investors are less affected by short-term market volatility, as their investments are more stable over the longer term. This means that investors can focus on the long-term performance of their investments, rather than being worried about short-term drops in stock prices.
4. You Don't Need Much to Start Passive Growth Investing
Because of its long-term buy-and-hold nature, long-term passive growth investing requires very little upfront capital. Depending on the stocks you purchase, you may be able to get started with as little as $100 per month.
This makes it a great starting point for investors with little starting capital, such as:
- students earning money from their part-time / casual jobs
- Individuals who have limited funds left after paying their expenses
Disadvantages of Long-term Passive Growth Stock Investing
1. You May Miss Out On Potential Opportunities
As passive growth investors focus on the long-term, they may miss out on potential opportunities that could arise from actively trading the markets. This could include taking advantage of short-term price movements or capitalizing on changes in company fundamentals.
2. Less Short-Term Profits
Since long-term passive growth investors are focused on the long-term, they may miss out on short-term gains that could be achieved through active trading – especially as their capital is tied up in long-term investments and unable to be deployed elsewhere.
3. Lower Returns Than Active Trading
Since long-term passive growth investors are going to ride out the markets, their returns may be lower than those achieved from actively trading the markets. This is because passive growth investors are not capitalizing on short-term price movements, and thus may not be able to fully take advantage of any market gains.
4. Longer Time Frame For Gains
Finally, passive growth investors need to be aware that it may take longer to realize gains from their investments. This is due to the fact that they are investing for the long-term and have no control over stock price movements. As such, patience is key when using this investment strategy.
This also means it may not be suitable for older investors nearing retirement, as they may not have the time or capacity to wait for their investments to appreciate in value – or in the unfortunate even of a global financial crash, recover from any potential losses.
What Long-Term Passive Growth Investors Need to Know
Long-term passive growth investors need to have a strong understanding of the fundamentals and current trends in stock markets in order to make informed decisions about what stocks to buy and when. Additionally, it is important for these investors to have a good handle on their risk tolerance and financial goals in order to stay disciplined in their investments.
While it is a more 'hands-off' approach to investing, long-term passive growth investing still requires due diligence and research in order to make profitable decisions. This means that investors must be willing to do the work necessary to make informed decisions.
Tips for Becoming A Successful Long-Term Passive Growth Investor
1. Do your research: Develop an understanding of the stock markets and the fundamentals behind them before you start investing. A great way to do this is to download our FREE 10 Must-Have Stock Criteria Checklist.
2. Know your risk tolerance: Develop a clear understanding of what level of risk you are comfortable taking with your investments.
3. Diversify your portfolio: Don't put all of your eggs in one basket. Spread out your investments across different stocks and industries to reduce the risk associated with any one investment. Just make sure you diversify the right way, and not the wrong way.
4. Have a plan: Set realistic expectations for yourself and decide on a timeline for when you want to achieve certain goals or returns from your investments. If you're not sure how to create a trading plan, check this blog post out.
5. Stick to the plan: Remain disciplined and don't get caught up in short-term thinking or trends that may not be sustainable over time. Be especially cautious when it comes to the news and media.
1-on-1 chat with sheep & grain farmer Jane Kellock
Schedule your FREE 1-on-1 Wealth Strategy Session
As a long-term passive growth investor, you don't need to worry about the markets constantly. However, it's still vital to understand market trends so you can time your investments correctly.
That's where our 1-on-1 Wealth Strategy Session comes in.
During this personalised session, we will discuss your current financial situation and goals, as well as analyse market trends to determine the best investment approach for you. We will also provide guidance on how to manage risk and maximise returns.
Plus, when you schedule a session, you'll receive a complimentary 90-day action plan, filled with valuable insights and tips on how to grow your wealth through more secure and stable investments.
I'll also answer any questions you have, so come ready with any questions you may have and bring your partner along!
Don't miss out on this opportunity to take control of your financial future. Schedule your FREE 1-on-1 Wealth Strategy Session today and start building a strong foundation for long-term passive growth.