Five rules of thumb for long-term investing

Share this

Many of us have experienced a setback of some kind this year, and it can be hard to know what to do when we’re suddenly in a situation we weren’t prepared for. This can sometimes lead to making snap judgment decisions that don’t always have the best long-term consequences.

When faced with a setback, you need to avoid jumping the gun — especially when it comes to your finances, or more specifically, your investment strategies.

To help you navigate uncertain times, check out these five rules of thumb for long-term investing. Though these strategies can’t guarantee a profit, they can help you keep your cool and remain a smart investor.

Rule of thumb #1: Take a long-term view

Investments are all about the big picture. It’s not about getting rich quick. Even short-term investments can take up to five years to come to fruition. It’s easy to get impatient when we’re tracking our investments, and watching them go up and down can be nerve wracking. However, to success in long-term can require a certain mindset — one where you focus and commit to the long term, and avoid making any short-sighted or emotional decisions. To learn how to shift your mindset in volatile times, check out this article.

Rule of thumb #2: Diversify your investments

Despite what you may think, diversifying your investments can actually be pretty simple. And if it’s something you can get into the habit of doing, it can lead to great dividends in the long-term.

All diversifying really means is spreading your money around and allocating your investment dollars into vehicles that work differently. This means you should consider spreading your investments across large, mid and small cap US stock, non-US stock, real estate, commodities, US bonds, and even treasury inflation protected securities — to name a few. Spreading your money across different investments like this can help to lower your overall risk.1

Rule of thumb #3: Follow systematic strategies

Following systematic strategies just means adhering to the plan you set out.

Two common systematic strategies to follow are dollar-cost averaging and rebalancing.

Dollar-cost averaging is about investing a fixed amount of money into the same security at set intervals, such as monthly or quarterly.  This strategy can help you stay on track for the long-term in times of short-term market volatility. You can find out more about how this strategy works here.

Rebalancing is the idea of taking the time to reset your investments at the end of the year, and in doing so, taking advantage of the highs and the lows.

For example, if you had four different investments with 25% of your funds in each of them, at the end of the year, some will have performed better than others. The natural reaction may be to put more money into the investments that have performed well and less into the ones that haven’t – but that may not be the best long-term strategy. Instead you should rebalance: sell off the investments that have performed well, and reinvest into the ones that haven’t until your funds have returned to a 25% distribution across your investments. By doing this you’re selling high and buying low.

Rule of thumb #4: Use tax-advantaged investments

Many returns on investment eventually face depreciation due to taxes. However, there are some investments that come with tax breaks from the government. In the US, this is the case with your 401(k) or an individual retirement account (IRA). When it comes to investing, a good rule of thumb is to max out your contributions to the investments that come with tax breaks before making any additional contributions to investments that do not provide any tax breaks. Not only will this contribute tax advantages to your portfolio, but it will also help you build a healthy retirement fund.

Rule of thumb #5: Keep expenses low

When it comes to investing, you need to make sure that you’re factoring in any brokerage fees or expenses. These can add up, with some firms taking a percentage of your return. But by consciously keeping your expenses low you can help to protect your returns.


It can be easy to worry about what we can’t control. But by incorporating some of these rules into your investment strategy, you can feel much more confident in your long-term plans when it comes to investing.

To help reach your next big milestone visit the onUp challenge or speak to a financial advisor. Make sure to tell them what your goals are so they can help you get one step closer to achieving them.



Join the onUp Challenge to get tips on ways to become a more confident investor.

Investment and Insurance Products:
Are not FDIC or any other Government Agency Insured • Are not Bank Guaranteed • May Lose Value

1How to Achieve Optimal Asset Allocation”, Heyford, Shauna Carther,, October 2019.

Regular investing does not assure a profit or protect against a loss in declining markets. Dollar Cost Averaging involves continuous investments in securities regardless of fluctuating price levels. Investors should consider their financial ability to continue purchases through periods of low price levels.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money. Past performance does not guarantee future results.

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

Services provided by the following affiliates of Truist Financial Corporation: Banking products and services, including loans and deposit accounts, are provided by SunTrust Bank and Branch Banking and Trust Company, both now Truist Bank, Member FDIC. Trust and investment management services are provided by SunTrust Bank and Branch Banking and Trust Company, both now Truist Bank, and SunTrust Delaware Trust Company. Securities, brokerage accounts and /or insurance (including annuities) are offered by SunTrust Investment Services, Inc., BB&T Securities, LLC, and P.J. Robb Variable Corp., LLC, which are SEC registered broker-dealers, members FINRA, SIPC, and a licensed insurance agency where applicable.    Investment advisory services are offered by SunTrust Advisory Services, Inc., GFO Advisory Services, LLC, BB&T Securities, LLC, Sterling Capital Management, LLC, Precept Advisory Group, LLC, and BB&T Institutional Investment Advisors, Inc., each SEC registered investment advisers.  BB&T Sterling Advisors, BB&T Investments and BB&T Scott & Stringfellow are divisions of BB&T Securities, LLC.   Mutual fund products are advised by Sterling Capital Management, LLC