Time horizon
One of the keys to Buffett’s success as a stock investor is his unusually long time horizon. He tends to hold onto stocks for several decades. He still holds shares in American Express, for example, which he first purchased in 1991.
By holding stocks for extended periods, Buffett is effectively riding out the market cycle.
Calculations by Capital Group also indicate that the longer you hold stocks, the lower your chances of losing money. If you hold an index fund for one year, for instance, your chances of a negative return in that period is 27%.
This risk reduces to 16% if you hold for three years or more, and further reduces to just 6% if you hold for 10 years.
So, remember: time in the market matters more than timing the market!
However, one of the hardest aspects of this buy-and-hold strategy is deciding which stocks to pick on your own and not lose money.
Active investors facing this challenge and seeking risk reduction, can leverage the tastytrade platform. It provides a range of tools for risk management and informed investment choices. The platform also delivers interactive content with daily valuation trading insights.
Additionally, the tastytrade Tax Centre serves as a central hub for all necessary tax documents, simplifying the often complex tax process for traders.
What if you are not an active trader? In that case, you may want to take a set-it-and-forget-it approach to investing in the stock market using Wealthfront. This automated investing platform builds you a personalized portfolio of low-cost index funds from up to 17 global asset classes tailored to your risk profile.
Wealthfront also helps take the stress out of tax time. The platform’s automated tax loss harvesting feature can help you lower your tax bill at the end of the year, giving you more money to invest.
Getting started is simple: after answering a few questions, Wealthfront can help you craft a diversified portfolio spanning a range of assets — from stocks to ETFs and bonds.
This is why professional investors like Buffett focus on expanding their time horizon as long as possible. Based on this strategy, corrections could actually work in your favor.
Invest in real estate without the headache of being a landlord
Imagine owning a portfolio of thousands of well-managed single family rentals or a collection of cutting-edge industrial warehouses. You can now gain access to a $1B portfolio of income-producing real estate assets designed to deliver long-term growth from the comforts of your couch.
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Learn MoreCorrections can be opportunities
Buffett has often compared buying stocks to buying groceries. In another interview with Becky Quick of CNBC, he said a drop in stock prices actually works in his favor. “We are a net buyer of stocks over time. Just like being a net buyer of food. I expect to buy food for the rest of my life and I hope that food prices go down tomorrow.”
This is a unique perspective on stock prices. While most investors panic and sell during market corrections and the media is filled with gloomy headlines, Buffett jumps in the pool and buys stocks when they’re cheap. This amplifies his long-term returns.
However, Buffett also invests in assets outside the stock market, and there are other long-term assets in this category that you can consider, too.
A golden alternative for your golden years
One option for a long term investment opportunity outside of the stock market you can consider is gold.
A gold IRA is a type of individual retirement account that allows you to invest in gold and other precious metals in physical form. So, you can build up your retirement fund with an asset that not only diversifies your portfolio but is also known to be a hedge against inflation.
With the help of Thor Metals, you can open a gold IRA that can potentially diversify your portfolio and stabilize your finances. These self-directed IRAs have the benefit of the tax advantages of a traditional IRA, as well as the inflation-hedging properties of gold.
If you’re curious about whether this is the right retirement investment for you, you can get a free information kit to learn more.
Real estate
Another way you can save for retirement and grow your wealth outside of the stock market is through real estate. Investing in real estate doesn’t always require you to purchase a property outright, so you can still invest without those hefty upfront costs.
With crowdfunding investing platforms like Arrived, you can own a percentage of physical real estate — such as vacation and rental properties — without the responsibilities that come along with being a landlord.
Backed by world-class investors like Jeff Bezos, Arrived allows you to invest in shares of rental homes without having to deal with the risks. To get started, simply browse through their curated selection of homes, vetted for their appreciation and income potential.
Once you find a property you like, choose the number of shares you want to buy and get started with as little as $100.
Commercial real estate is another form of real estate investing that has the potential to provide steady income and capital appreciation for investors. Commercial real estate has beaten the stock market for 25 years — but in the past, only the super-rich could buy in. This has now changed.
Companies such as First National Realty Partners allow individual accredited investors to access institutional-quality commercial real estate investment properties leased by national brands like Whole Foods, CVS, Kroger and Walmart.
Through FNRP, everyday investors can become landlords of these famous high street names, providing the potential for stable cash flow — without the worry of tenant and property management.
A creative alternative
If you’ve ever wondered why billionaires invest in art, it’s not just to have a pretty picture hanging out the wall. Fine art is a way of diversifying your portfolio — and it can even be done through purchasing fractional shares.
With Masterworks, you can invest in artwork by iconic artists from Banksy to Basquiat. Masterworks’ online platform allows you to invest in fractional shares of famous works without paying auction prices. As calculated by the Masterworks All Art Index, from 1995-2021, contemporary art prices outpaced the S&P 500 by 131%.
Simply browse through the pieces in their portfolio and choose how many shares you’d like to buy. Masterworks will take care of the rest — making elite art investments accessible and hassle-free.
With $60 billion in annual transaction volume and a total estimated global value of $1.7 trillion, art represents a massive asset class worth considering.
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