"Investing For The Long Term"

Introduction

Warren Buffett - the most commonsensical investor of all timeWarren Buffett - the most commonsensical investor of all time - always investing for the long term

Investing for the long term and saving for your retirement is a marriage made in heaven.

Here at Common Sense Retirement Investing we repeat ad nauseum that money deposited into a Self Invested Personal Pension (SIPP) is for the long term.  It is not a pot of money that you need to be reckless with. 

Some poeple like a flutter, or a gamble.  And that's fine too, but don't use your SIPP as a vehicle for those habits.

We stand by the teachings of Warren Buffett.  He is our hero.  A man to follow.  Most of what you will read on this website is 90% derived from his principles.

Why would you question the wisdom of the Sage of Omaha - he has amassed $90 Billion and done so by investing for the long term and being patient.

We are confirmed Buffettologists - and so should you be.

"What's The Secret To
Investing For The Long Term?"

I first heard about investing for the long term at a very young age (16) and the principle has stuck like glue to this day.

What seems like a lifetime away, when I was just a lad (working as a bell boy), an old sage said to me: "It's time in the market, not timing the market that will make you rich."

I hadn't a clue what he was talking about.

But what wise words those have turned out to be.

Of course, what he meant was that you first identify a company you want to invest in by researching that company really well, wait patiently in order to buy at a price you have determined, hold that share until circumstances change (which they rarely will), and then just - rinse and repeat.

And that is the secret.

Want proof?

Warren Buffett is living proof that it works.  And works really well.  Warren understands compound interest.  Take a look at Einstein's Eighth Wonder of The World for a more detailed explanation.

You will read on this website about Value Investing, Momentum Investing, and Growth Investing.  But our hero, Warren, is 90% Value Investing, and 10% Growth Investing.  He's not really into Momentum Investing.  He's not all that bothered about Growth Investing.

He puts all his faith into Value Investing.

Why?

Because he knows that it pays.  Why would he want to "speculate" in anything else.  Value Investing has been responsible for his massive wealth.

His philosophy is that over time - value rises to the top but momentum slows down, and growth may not last forever.

"What Proof is There That Investing
For The Long Term is The Way To Go?"

FTSE 100 IndexThe FTSE 100 Index

The FTSE 100 Index was "born" in the start of 1984 so hasn't got that much history but the trend has always been up.

It succeeded the FT-30 Index which was a poor representation of the UK market - covering only the top 30 UK companies.

A far better index to use would be the FT All Share Index.  However, all the major UK indices show an upward trend - proving beyond doubt that investing for the long term is the way to go.

Dow Jones Industrial AverageThe Dow Jones Industrial Average from its inception to present day

The Dow Jones Industrial Average has been around for about 120 years and you can clearly see, even allowing for the 'Great Crash' in 1929 the trend has been relentlessly up.

It started out as a transportation index with as little as a dozen companies or so.

Even now, it has only 30 constituents, and like the FT-100 Index is not a true reflection of the US market as a whole.

But, even allowing for disasters such as the 1929 Wall Street crash, two World Wars, the recession of 1970-74, the crash of 1987, the dot com crash, the banking crisis of 2008-9, and the 2020 Corona Virus panic - the trend has been relentlessly upward. Again proving that investing for the long term is the way to go.

"What Does Warren Recommend?"

Warren Buffett recommends investing for the long term.  Who would argue with him?

Despite this message being made over and over again - it is surprising how many people do not take cogniscance.

Your future is in your hands - right now.  You MUST take it.

As for investing for the long term, Warren reckons you only need research 20 or 30 companies throughout your whole lifetime. 

Yes, that sounds crazy but think about that for a moment.

Warren sets strict criteria for selecting a share to invest in, and even then, he will not invest at any price.  He waits, and he waits, until the price falls sufficiently to meet his criteria.

You can find what Warren's criteria is in many parts of this website but his key points can be summarised here:

1.  Identify suitable companies to invest in

2.  Wait to buy those companies at a fair price

3.  When the opportunity in those companies presents themselves, buy as may of them as you can afford.

4.  Hold those company shares through thick and thin, only selling when either their circumstances change (unlikely if you have done the right research) or when the market as a whole makes a major correction

5.  In practice, this could mean holding the shares for decades (which is what Warren does)

Sounds simple enough doesn't it?  But the real work is done in 1. and 2. above.  Warren Buffett has been known to spend months analysing a single company.  But you don't have to go to such extremes.

After all, non of us are financial geniuses.  At least, I am not.

On this website there are numerous articles that give you a simplified approach.  For example, take a look at the light-hearted meetings of Chris and Clem

And keep looking at "What's New" and the section on Fundamental Analysis there are new articles being added continuously.

Get ingrained into to your psych that investing for the long term will be fundamental to your wealth in your twilight years.

"What Do We Recommend?"

Very simple.

We recommend that you read as much information on investing for the long term as you can get your hands on.

The daily newspapers always have articles on the topic.

Probably the best starting point is to search for: "Investing For The Long Term" on Google or Amazon.

You will find a wealth of information.

Conclusion

Having time and patience is what separates the rich from the poor.

The impatient are always looking for that "quick turn."

They, are nothing more than speculators.

Building wealth is not about getting something, it's about giving up something.  If you want to retire rich - or just very comfortable - then you are going to need to make sacrifices.

Sacrifices such as making sure you save a regular amount each and every month - come what may.  Go without a few of life's luxuries if it means that your regular monthly retirement savings are made.

Over time - Einstein's Eighth Wonder of The World will work its magic for you. 

For most of us, one thing is for sure.  We will arrive.  We will reach retirement age.

You do not want to be short of anything.  You simply cannot get that time back.  So take advantage of it whilst it is there.  Like right now.

Make sure your policy is investing for the long term.

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