Long-Term Approach

The importance of taking a long-term approach to investing

The empirical and anecdotal evidence compiled over the last couple of decades clearly shows that investors who adhere to a long-term strategy bound with patience and discipline have consistently outperformed market timers and stock pickers. It may be a strategy as simple as “buy and hold” a 60/40 asset allocation of stock and bond index funds, which, by the way, would have outperformed most actively managed strategies in these last couple of years. The data confirms that those who trade least are going to make fewer mistakes and keep their costs to a minimum.

Studies clearly show that investors who adhere to a long-term approach to investing, with clearly defined objectives and a tailored investment strategy, outperform those who don’t. A well-conceived investment strategy is what keeps investors from falling into investment traps, such as chasing returns or trying to time the markets.

• A long-term approach enables investors to stay focused on their individual benchmarks, rather than market benchmarks or indexes, which are meaningless to an individual’s long-term strategy.

• A long-term approach keeps investors firmly grounded in risk management principles that closely track their personal risk profile while optimizing their asset allocation.

• More importantly, a long-term approach shields investors from the irrational behavior of the herd which is often driven by euphoria or panic. From 2007 to 2010, investors who adhered to their long-term strategy performed significantly better than those who bought as the market neared its peak, and those who sold in panic as the market plunged.

At Winship Wealth Partners, we apply decades of academic research to help our clients stay focused on their long term objectives while adhering to a long-term investment strategy based in time-tested principles and practices.