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Seven Principles of Long-Term Investing

Seven Principles of Long-Term Investing

March 15, 2022

Why should you invest? You are working hard for your money every day; in turn, your money should return the favor and work for you. After all, you will need that money to last a long time in your retirement years.

Surprisingly, a recent AARP study found that millions of Americans aged 55 and older stash sums of cash at home (, March 22, 2019). Our Financial Professionals at Cambridge can attest to this as we have had these same conversations with our clients. Furthermore, many people don’t start investing until their later years, which leaves them very little time to build wealth.

When we look at it today, 42% of Americans are expected to retire with less than $10,000 saved or invested (, January 16, 2019). While these facts may be overwhelming and you don’t know where to turn, the simple solution is to start investing and get your money working for you. The earlier you begin, the better off you will be long-term.

It is important to start investing early because compound interest plays a crucial role in our financial success. In doing so, I have highlighted below the Seven Principles of Long-Term Investing.

  • Allocate your assets: Asset allocation helps you divide your money among different asset classes. These may include stocks, bonds, and cash alternatives. Be sure to take your time horizon and risk tolerance into consideration. If you would like help determining your risk tolerance, please contact
  • Take Advantage of opportunities: If you are working for an employer and they offer you a 401(k) with a match, take advantage of that opportunity. This is an extra incentive available to you for enrolling in an employer-sponsored plan.
  • Take the appropriate risk: Know how much risk you are willing to accept. An individual saving for retirement in their 20s might be more comfortable with taking more risks than someone in their 50s. Someone who is risk-averse but is taking on more risk than they are comfortable with is more likely to sell their assets at a loss in the event of a market downturn.
  • Make regular contributions: One of the most efficient ways to build wealth is through consistent investing. This will take discipline but making this a habit will help your investment grow over time. Another way to help build this habit is through automatic investments. Having a systematic withdrawal to your investment account each month will get you one step closer to achieving financial success.
  • Understand what you own: We tend to want to understand the things that we buy so we know how they work. Think about the last time you bought a car, a new home, even health insurance. If we don’t understand the things we buy, then we end up not knowing how to use them. Investing should be no different. Have a basic understanding of the business you want to invest in. You will feel more confident in your long-term approach, and you will alleviate confusion.
  • Consider starting early: It is okay to start with a little amount each month. What is important is that you get started building the habit. The early you start investing, the easier it is to build long-term wealth and achieve financial success.
  • Manage your emotions: When markets have tumbled in the past, they tend to send emotional investors into a stage of panic. Instead of riding the wave, they get out as quickly as they can. We must make responsible and clearheaded investing decisions to pursue our long-term investment goals.

We live in a world where financial information is surrounded by a lot of “noise”, making it difficult to know where to start. Download the e-guide Seven Principles of Long-Term Investing for much more detail on these important principles. However, working with a Financial Professional is the best way to achieve your long-term investing goals.

Some content has been used with permission and/or may be adapted from materials prepared by FMG Suite.  FMG is unaffiliated with HTK.  Investing involves risk, including the potential loss of principal invested.  Investments offering the potential for higher rates of return also involve a higher degree of risk to principal. Registered Representative of, and Securities and Investment Advisory services are offered through Hornor, Townsend & Kent, LLC, (HTK), Registered Investment Advisor, Member FINRA/SIPC,