Understanding your investment time horizons
Any investment journey begins with an analysis of your needs and goals and the timeframe in which you want to achieve them. It’s a vital first step that will decide what your portfolio looks like. Long-term financial planning for retirement will be different from an investment plan for a downpayment on a house, for example.
A long-term outlook gives investors the opportunity to invest in assets that are known to be more volatile than others in the short-term but have the potential for greater returns in the long run.
An investment strategy can be broken down into various parts but on a timeframe there are two types of investing. Long term and short term.
Long-term investing is when an investor holds investments for an extended period. This is typically five years or more but the timeframe is not set in stone.
Short-term investing is when an investor buys and sells investments within a shorter period, typically less than a year. Both types of investing can be successful, but long-term investing has many advantages, especially for those new to investing.
How to invest long term
Long-term investing is all about patience and discipline. The goal is to invest in companies, funds or cryptocurrencies that have a strong track record of performance and growth.
When investing long-term, it’s wise to focus on diversification, which means spreading your investments across different industries, asset classes, and different coins. The main aim is to help mitigate the risk of losses by ensuring that if one investment performs poorly, the others will help to offset those losses.
Short-term investors focus on quick profits, and their investment decisions are often driven by market trends, news, or other short-term factors. Long-term investors generally invest in trusted assets that have the best shot at performing over a long timeframe.
5 benefits to long-term investing
Long-term investing allows investors to benefit from compound interest, meaning they can reinvest returns and exponentially grow their investments over time.
Spreading the risk
By investing in a diversified portfolio of assets, long-term investors spread their risk and reduce the impact of any single investment’s performance.
Long-term capital gains tax rates are typically lower than short-term capital gains tax rates. This will vary from country to country.
Time in the market
Long-term investing allows investors to stay invested in the market for a longer period, which means that they can ride out short-term market fluctuations and focus on the long-term potential of their investments.
Potential for returns
By investing in high-quality cryptocurrencies with a proven track record of performance and growth, long-term investors have the potential to achieve significant returns over time.
An easier way to invest long term
In one simple purchase, the Luno Large Cap gives you ownership of a selection of the biggest cryptocurrencies, which we update every three months to track an index called the CoinDesk Large-Cap Select Index (DLCS). The Index aims to always cover at least 70% of the crypto market by total value. This means investors can hope to see returns representative of an investment in the overall crypto market.
The Luno Large Cap Bundle is only available in certain regions.
By investing in the overall market, you can effectively invest in the future of crypto, the opportunity presented by the technology and its adoption. This makes you less vulnerable to the movements of individual coins – in the event that one fails entirely, you’re still invested in coins that make up the majority of the market. The coins are also screened to ensure that only the most trusted and legitimate coins are included. Read here for more on the Luno Large Cap Bundle.
As long-term investors in traditional finance might invest in an investment vehicle that tracks the SP500 index (the largest 500 listed companies in the US), long-term crypto investors can use the bundle to invest, with one purchase, in the most trusted and biggest coins in crypto. The bundle fits in perfectly with a long-term investment strategy.