This One Strategy Can Make You a Successful Investor

It’s definitely worth employing.

Key points

Investors who try to make a quick buck in the stock market often fail. Being patient could be your ticket to making a lot of money as an investor.

Whether you’re buying assets to put into your brokerage account or IRA, your goal is no doubt to see those assets gain value. But that doesn’t always happen from one year to the next.

Take a look at how the stock market performed in 2022. Many investors have lost money (at least on screen or on paper) in their brokerage accounts and IRAs due to a broad market downturn. And so investors who bought stocks at the start of 2022 with the intent to sell them at the end of the year at a profit may be pretty discouraged right about now.

But buying assets to sell off quickly generally isn’t your best bet on the road to growing wealth. And if you want to be successful as an investor, there is one strategy worth employing.

It pays to buy and hold

It’s important to research the assets you invest in. In the case of stocks, that means looking at different companies’ financial data to make sure they’re managing their money well and don’t have too much debt.

But once you identify quality stocks or assets to buy, you should plan to hold them for many years. Over time, the assets you buy are likely to gain value. But that may not happen in the short term. And if you sell assets too quickly, you might lose out on the opportunity to enjoy larger gains.

In fact, in a recent tweet, Graham Stephan addressed the importance of being a long-term investor. He’s a firm believer that the longer you invest, the lower the risk of losing money.

Case in point: The stock market has had a pretty terrible year. But over the past 40 years, it’s up quite a lot. So if you’re going to invest, have a long-term mindset. Don’t expect to get rich quickly.

Some assets are worth selling

You may be sitting on assets in your investment portfolio that have been consistently underperforming for years. Those may be assets worth selling, because they’re clearly not gaining value.

But if your portfolio is down on a whole this year due to general market volatility, don’t get discouraged — and definitely don’t dump all of your investments because you’re unhappy with the events of the past 11 months and change. Doing so will only guarantee that you end up taking losses, whereas if you wait things out, there’s a good chance your portfolio will recover over time and you won’t lose as much as a dollar.

Holding onto quality assets for a long time is a great way to grow wealth. And as long as you’re taking that long-term approach, you might as well remind yourself that in the grand scheme of your investing career, this year’s stock market performance is largely irrelevant. So rather than get bummed out about the state of your portfolio, keep your eyes on the big picture and note that 30 years from now, you probably won’t even remember how your IRA or brokerage account fared in 2022.