Long-term investment strategies can be useful for anyone who has a savings goal that’s at least several years away. These goals can include retirement, paying for college or building wealth. The longer an investor holds onto their investments, the more potential growth they may see thanks to the power of compound interest.

Investors with a longer time horizon can also benefit from diversification. By exposing themselves to different market sectors that perform differently and by leveraging best practices like dollar-cost averaging, investors can potentially mitigate the impact of periodic market ups and downs. They can also minimize taxes by investing in accounts that offer tax advantages, such as 529 college savings plans.

Financial Advice for All Levels: From Saving Smarter to Investing Better

Another key factor that can affect long-term investment strategies is knowing their risk tolerance and how often they want to invest — will they invest in one lump sum or make recurring contributions? They can also consider how often they plan to withdraw from their investments — if they need income for living expenses or would prefer to take withdrawals in the form of regular distributions.

Ultimately, long-term investment strategies are designed to help investors reach their savings goals over a period of several years or more. While no investment strategy is guaranteed, it’s important to remember that historically, markets tend to trend upward over long periods of time. However, it’s critical for investors to be able to weather periodic dips without reacting emotionally or jumping in and out of the market.