7 Long-Term Investment Strategies for 2024 (2024)

Vault’s Viewpoint

• Long-term investment strategies can help you build wealth over time.
• Consistency is key when using long-term investing strategies. Invest regularly for the best long-term results.
• Review your long-term financial goals and create a portfolio that addresses your changing circ*mstances.

7 Long-Term Investment Strategies to Build Wealth Over Time

Investing is one of the best ways to build wealth over time, especially if you’re consistent. By beginning early and investing regularly, you can develop a habit that is likely to result in an impressive portfolio down the road.

As you build your financial future, consider using the following long-term investment strategies, depending on which are likely to fit your financial and emotional risk tolerance.

1. Traditional Tax-Advantaged Investment Accounts

Start with the basics. If you have access to a 401(k) plan at work, this is a good place to start. Money is automatically deducted from your paycheck and put into an account that has a tax benefit. For a traditional retirement account, that usually means a tax deduction in the year you contribute to the plan, as well as tax-deferred growth until you begin withdrawals.

You can begin investing without a lot of fuss—and without a large lump sum. Over time, you can increase your withholdings to improve your results.

Two other possibilities for traditional tax-advantaged investment accounts include:

• Individual Retirement Account (IRA)
• Health Savings Account (HSA)

Both of these tax-advantaged accounts allow you to make tax-deductible contributions and invest the money. While the money is in the account, it grows tax-deferred. You won’t pay taxes on money in your IRA until you withdraw it. For an HSA, you won’t have to pay taxes at all as long as you use the money for qualified medical expenses.

Automatically transfer money to your tax-advantaged accounts at regular intervals and set up an automatic investment plan so you’re consistently investing without thinking about it.

2. Roth Tax-Advantaged Accounts

With a traditional tax-advantaged retirement account, you reap your tax benefit today and pay taxes later. If you think that your taxes will be lower in the future, sticking with a traditional account might make sense.

But what if you wanted a long-term investment strategy that would result in paying no taxes on your withdrawals from a retirement account? That’s where a Roth account comes in. You can make Roth contributions to your 401(k) or IRA.

You contribute with after-tax dollars, but the money grows tax-deferred and you don’t pay taxes on it when you withdraw. On top of that, you don’t have to worry about required minimum distributions (RMDs) from Roth-designated accounts.

Using a combination of traditional and Roth retirement accounts can help you manage your tax situation in the future while building your nest egg.

3. Buy and Hold Individual Value Stocks

If you’re interested in choosing stocks with future potential, value stocks are a solid option worth considering. Value stocks are those considered undervalued relative to how the underlying businesses perform.

The idea is that you research and buy the best stocks with prices that appear to be discounted based on earnings, valuation and other metrics. In theory, they should appreciate over time, giving you a long-term asset you can count on later and returning outsized value based on your initial investment.

Depending on your situation, it might make sense to continue buying shares of value stocks over time, especially if the stock remains undervalued. At some point, though, you simply hold the shares, trusting that they will appreciate over time, growing your portfolio.

4. Stock Funds

If you don’t like researching and choosing individual stocks, consider a stock fund. These are collections of assets, so purchasing a share of a fund gives you exposure across a broad range of companies.

The two main types of stock funds you’re likely to see include:

• Mutual funds allow you to own a bit of everything held in the fund. Index mutual funds are a subset of mutual funds.
• Exchange-traded funds (ETFs) appear similar to mutual funds, but you don’t actually own shares in the underlying companies. Shares of ETFs are traded on the market, similar to how individual stocks are. There are index ETFs that offer exposure to large swaths of the market.

One of the simplest ways to invest in stock funds is to choose an index product. Your performance will follow along with the chosen index, such as the S&P 500 or the Russell 2000.

Consistently buying shares of stock funds can help you grow your portfolio as the market continues to rise.

5. Bond Funds

Bond funds might make sense if you’re looking to add a little more safety to your portfolio. Individual bonds function as loans to organizations. You receive regular interest payments, and when the bond matures, you receive the money you originally used to purchase the bonds.

If tracking individual bonds and maturities feels like too much for you, a long-term investment strategy might be to add bond funds. You choose a bond with an overall theme, and over time, you see the returns.

Depending on the types of bonds in the funds, your returns are likely to vary—although they won’t usually surpass what you see from a stock fund. If you invest consistently, though, growing the bond portion of your portfolio, you might eventually receive enough interest income to help supplement your financial goals.

Consider bond funds that match your asset allocation goals and other objectives. For example, you can find bond funds that focus on inflation-protected Treasuries or funds that focus on municipalities.

6. Dividend Stocks

Dividend stocks are best for investors looking for a combination of income and potential appreciation. When you invest in dividend stocks, you receive a regular payout based on the number of shares you own.

Creating a dividend portfolio is one of the best long-term investment strategies because it offers you a chance to receive income even as the stocks you own potentially appreciate in value. For many, a long-term dividend investing strategy is broken into two parts:

• Build: During this phase, you add shares to your portfolio. You can buy individual dividend stocks or invest in a dividend stock fund. You invest a set amount each week or month. Every time you receive dividends, you automatically reinvest them to buy more shares (or fractional shares).
• Income: Over the years, consistently buying shares of dividend stocks (or funds) results in more shares—and increasingly larger payouts. When you reach a certain point, you might decide to stop reinvesting the dividends and instead use them as a way to supplement your income.

It’s also possible to later sell some of your shares and capture the appreciation.

7. Real Estate

Any discussion of long-term investing strategies needs to include real estate. When you buy real estate, here are potential ways to benefit in the long run:

• Appreciation: Whether you invest in raw land, multi-family properties or just hope the house you live in will be worth more down the road, the potential for appreciation makes real estate attractive. If you can buy a property and sell it years later for much more, you could end up with a nice chunk of capital to help you with your future money goals.
• Current (and future) cash flow: Some people invest in real estate through rentals and get cash as a result. Receiving regular cash from real estate is a way to supplement income for the long term.

What About Real Estate Investment Trusts (REITs)?

Another way to invest in real estate is to use a real estate investment trust (REIT). With a REIT, you can gain exposure to real estate investments without buying property. When using a REIT as a long-term investing strategy, you might consider using a set amount of money to purchase shares regularly.

Over time, as the assets in the REIT appreciate or pay dividends, you have the potential to see returns.