Best Long Term Investments for 2017 | Investing for the Long Term

Intro: Best Long Term Investments for 2017 | Investing for the Long Term

If you want to build a nest egg for a comfortable future, then long-term investments are a must. They may not have the same appeal as trying to hit the lottery or strike it rich on the right short-term tech stock, but let’s be honest: it’s much more realistic and less risky to focus on long-term investing.

Many people get caught up in the day to day of life and don’t really think about investing long-term, but it’s something that you can do fairly easily and at just about anytime in life. Don’t worry that if you’re over 50 your chance for long-term stock investments has gone by the wayside – it’s not too late.

In this article, we will explore the question, “What is a long-term investment?” as well as offer an overview of what to expect when investing for the long term, trustworthy investment companies you can use, what type of returns you can expect, and a list of the best long-term investments for 2017.

What is a long-term investment?

The term is somewhat self-explanatory, but still it can be a little fuzzy. Exactly what is a long-term investment? If you’re searching online, this can become confusing as some sites specify an investment that matures in more than 10 years, while others state that they only need to be held more than one year to be considered long-term investments.

Image Source: Pixabay.com

To get the best answer for what a long-term investment is, let’s take a look at the IRS definition. When setting rules for capital gain or loss reporting, they state, “If you held the property for more than one year, your gain or loss is long-term. If you held it one year or less, the gain or loss is short-term.”

So, technically more than one year is the mark, although most people consider investing for the long-term to be a few more years than that – usually 10 or more.

Advantages of long-term investing

You may be wondering, “Why not just do some day trading for a big score?” Well, even though investing long-term may give you less instant gratification, it is much less risky and much more likely to keep you and your family safe from a big financial loss due to a bad stock decision or volatile markets.

Here are a few main advantages of long-term investments from The Motley Fool:

You can keep calm and carry on. No need to jump at every stock fluctuation when you’re investing long-term.

You’re more likely to make money. Long-term investing is less volatile and typically has a better chance of making money than short-term.

A penny earned in dividends is a penny multiplied. You can take advantage of compounding, which is the ability to reinvest your stock dividends (profits).

Much softer learning curve. It’s easier to choose good stocks for long-term investment than try to learn all the fluctuations and nuances of day trading.

Corrections are easier to make. Stocks fluctuate normally, but if you’re investing long-term, you have a better chance of making “course corrections.”

You’ll pay less in taxes. For long-term investments, where you’ve held the asset for over a year, you’ll pay a lower capital gains rate, roughly 0% to 20%, depending upon income, as compared to 10% to 39.6% for assets held a year or less.

Don’t Miss: Investment Advisor Search – Top Investment Companies

All-in-One Change Management Tools

Top Rated Toolkit for Change Managers.

Get Your Change Management Tool Today...

The Best Long-Term Investments in 2017

Now that we know why investing for the long-term makes complete sense, let’s take a look at what that means for you. Which long-term stock investments make the most sense? What other types of investing for the long-term are going to get you where you want to be financially?

First, we are going to take a look at the main types of long-term investments available; then, we’ll reveal some more detailed advice from notable business tycoons like Warren Buffett.

Main types of long-term investments

Stocks – Most long term stock investments are with reliable companies, such as those on the S&P 500 Index.

Bonds – Unlike stock, which is ownership in a company, when you purchase a bond, you are lending money to a government (like U.S. Treasury bonds), municipality, corporation, or other entity known as an issuer.

Mutual Funds – A mutual fund is an investment in multiple types of stocks. The fund offers a diversified portfolio, which can be actively or passively managed, so you have less risk than just investing in one or two stocks.

ETFs, Exchange-Traded Funds – These are similar to mutual funds in many areas. The main difference is that they trade all day during the trading day, just like stocks. They can trade at the net asset value of the underlying holdings or above or below.

Retirement Accounts – Retirement accounts are typically IRAs or 401(k)s, which can give you the opportunity to contribute on a pre-tax basis. They aren’t an investment themselves in the traditional sense; these accounts typically are invested in a menu of different mutual funds or other securities.

What is a long-term investment current average yield?

According to Investopedia.com, “Current Yield” is the annual income, in either interest or dividends, divided by the current price of an investment. This of course can fluctuate due to changing market factors.

Here are some current average yields you can expect when investing long-term, of course depending upon quality of the investment and the market:

Stocks (S&P 500) – 2.09%
Bonds (U.S., Municipal, Corporate) – 0.86% – 4.01%
Mutual Funds (Ref: Janus, Fidelity) – 0.41% – 6.69%
ETFs (Ref. Dividend.com) – 0.35% – 10.36%

Long-term investing tips from the pros

Image Source: The Wall Street Journal

Warren Buffett: Low-cost S&P 500 index funds with Vanguard

According to an article in The Wall Street Journal, Mr. Buffett has left instructions for when he passes away for his trustee to invest the cash designated for his wife in two ways — 10% in short-term government bonds and 90% in a very low-cost S&P index fund. He suggests Vanguard’s index fund.

Jim Cramer of “Mad Money”: If you’re young, go with stocks over bonds

According to an article on HuffingtonPost.com, Jim Cramer of CNBC’s “Mad Money” show and founder of investment site TheStreet.com says, “There’s absolutely no reason for someone who’s in their 20s to have bond exposure when that money could be invested in stocks, where it will most likely end up consistently making you a higher return, year after year.”

Mark Cuban: Use your informational advantage when investing

In an interview with YoungMoney.com, Mark Cuban was asked for any general saving or investing advice. “Put it in the bank.” was his best long term investing advice, but he also said, “Never put your money in something where you don’t have an information advantage. Why invest your money in something because a broker told you to? If the broker had a clue, he/she wouldn’t be a broker, they would be on a beach somewhere.”

Kevin O’Leary of “Shark Tank”: ETFs (his own) and stocks that pay dividends

In an interview with Forbes magazine Kevin O’Leary, aka “Mr. Wonderful” on the show “Shark Tank,” talked about his new O’Shares ETFs, created as an investment solution for his family trust when he couldn’t find one existing that he liked. He also gave this advice, “Over the last 40 years, 70% of the market’s returns came from dividends, not capital appreciation. So I will never own a stock that doesn’t pay a dividend.”

Ashton Kutcher: Invest in what you know

Most of us know Ashton Kutcher from the TV and film world, but this actor is also well-known for making great tech investments. In this video interview on Entrepreneur.com, he gives his best advice, “Just invest in the things you know. If you drink vodka every day, you probably know what the best vodka is.” He also mentions that it’s important to research the company before investing for the long-term.

Long Term Stock Investments – Tips from the Web

There are a lot of “go to” websites out there for learning more about the investment world and what the current “best bets” are out there for long-term investments. Just remember to take any advice you read with a grain of salt. Nothing can replace your own research, judgment, and knowledge when you invest.

The Street – Top 10 High-Quality Dividend Stocks for Long Term Investments

The picks from The Street include: General Mils (GIS), Cummins (CMI), Coca-Cola (KO), Intel (INTC), Cisco (CSCO), Walmart (WMT), Paychex (PAYX), T. Rowe Price (TROW), Flowers Foods (FLO), Boeing (BA).

Forbes – 5 Stocks to Buy For the Long-Term

In an interview with Robert W. Kleinschmidt, President, CEO, and CIO of Tocqueville Asset Management L.P., the tops picks were: Alcoa (AA), Cameco (CCJ), Noble Energy (NBL), Qualcomm (QCOM), Alkermes (ALKS).

U.S. News – Best Mutual Funds

U.S. News has a large listing of their best picks in several areas. Here are a few choice ones for long-term investing: SEI Tax Exempt Trust Tax-Advantaged Income Fund (SEATX), PIMCO Long-Term Credit Fund (PTCIX), SEI Institutional Investments Trust Long Duration Fund (LDRAX), Vanguard Equity Income Fund (VEIPX), Vanguard Value Index Fund (VIVAX), Boston Partners All Cap Value Fund (BPAIX).

CNBC –Top 10 Stock Picks for 2016

Michael K. Farr shares his top 10 picks for this year: Chevron (CVX), CVS Health (CVS), Donaldson (DCI), Goldman Sachs (GS), Johnson & Johnson (JNJ), Lowes (LOW), Perrigo Company (PRGO), Qualcomm (QCOM), Sprouts Farmers Market (SFM), United Technologies (UTX).

Image Source: Qualcomm

Wow! That is a lot of advice. So, what is a long-term investment best bet? There are a lot of choices, but if you have an eagle eye, you’ll note that there is one company that is on two of the “best” lists, Qualcomm, so you may want to check that out. But always remember the advice from both Mark Cuban and Ashton Kutcher: investing in what you know is always a good idea.

Where to go for your long-term investments

Now that you have an idea of the types of investments you can make when investing long-term, and the companies and funds to look for, where do you go to make it happen? There are several firms that can help you with investing for the long-term; here are the top 10 ranked best on a J.D. Power U.S. Self-Directed Investor Satisfaction Study (2016):

Free Wealth & Finance Software - Get Yours Now ►

Last thoughts on investing for the long-term

No one argues that investing long-term isn’t a great idea; it can just be a little daunting. We hope that it’s a little clearer for you now, both in terms of where to look and what to look for if you’re planning some long-term investments for 2016. Our goal was to not only answer the question, “What is long-term investment?” for you, but also to give you some excellent advice from the experts and point you in the right direction.

With so many options for investing and so many voices giving you advice, it can seem a bit challenging at times to figure out what is a long-term investment that makes sense. But if you follow some of the basics, stay calm, stay diversified, and go with what you know, investing for the long-term really can be quite fun and rewarding.

Remember, you have a lot of resources to help you along the way, and with so many options between stocks, bonds, ETFs, and mutual funds, you can choose your level of risk versus reward carefully to ensure a positive outcome in your future. We all plan for those days when work is behind us and we can have the freedom to explore our passions 24/7, and long-term investments done right can help us achieve our dreams.

AdvisoryHQ (AHQ) Disclaimer:

Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info.

Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.