Are you excited about building wealth and starting long-term equity investment?

Before you get excited about investing in stocks, I recommend you increase your financial knowledge so you can understand what you are doing.

In this article, I will show you three easy techniques to use when investing in the stock market for a long time.


If you are a beginner, I recommend you start slowly.

To reduce your risk, you may consider using one or both of the following investment techniques:
Cost averaging, portfolio rebalancing, tax loss.


Dollar averaging is the first technique that can be used to invest in long-term stocks, called the purchase cost average method, the dollar average cost method, and split-earning investment.

The dollar-cost average is an investment technique that purchases a certain amount of investment constantly and constantly regardless of stock price.

 This is the best long term strategy. Averaging dollar costs minimises risk from market fluctuations.

When prices are low, investors buy more stocks, and when prices are high, they buy less.
As a result, the average price per week may decrease over time.

Because it makes steady purchases on a regular schedule, it also has the effect of not trying to match the timing of the market.

With dollar cost averaging, you can reduce your market risk and increase your investment over time, no matter where you go.

Long term securities investment. I personally use Robin Hood to buy individual stocks and implement this strategy.

Every month I transfer money to my Robin Hood account and buy stocks of companies I trust.


The second long-term securities investment technique is to rebalance the portfolio on a regular basis.
The rebalancing is to sell and buy the assets of the portfolio in accordance with the asset allocation plan.

For example, suppose you originally assigned 70% or a portfolio to a stock and 30% to a bond.
If your stocks perform well over the year, it can increase the percentage of shares in your portfolio by up to 80%.

Therefore, it is advisable to sell some shares and buy bonds to return the portfolio to its original goal of 70:30.

Why would you want to rebalance your portfolio ?

"If I readjust my portfolio and stock prices are going well, why are you trying to sell them?" The simple answer is that rebalancing reduces the risk.

You sometimes want to benefit from your winners. By allowing the share ratios to continue to rise, speaking of 90: 1 increases the risk of the portfolio.

Remember that stocks are more risky than bonds because of the volatile market fluctuations.

By rebalancing the portfolio, even giving up some of the phases can minimise losses in the negative aspects of the market.

Another benefit of the rebalancing is that it benefits from the profit of the winning investment while at the same time it pays a lower price for poorly performing investments.

In other words, it does not matter whether it is stock or bond. They are forced to sell at a low price and sell at a high price.

When do I have to rebalance my portfolio?

"Can you tell when it is time to readjust?" A good rule of long-term equity investment is to readjust the balance every year.

If retirement is near, you may want to rebalance if you want to rebalance quarterly or if the asset class weight changes by more than 5%.

This technique can be set automatically by most robotic advisors. Robo Advisor is an online auto advisor.

They will use your computer algorithm to invest your money according to your specific goals.

Because Robo Advisor is cheaper than you pay for human financial advisors, it is a very affordable option for your investment.


The third long-term investment technique is tax relief. If you have stocks that are worth increasing, you have to pay a transfer income tax on the profit once you sell.

To reduce taxes on income, you can use a strategy called loss-recovery strategy. Long term securities investment.

Tax losses are the offsetting of capital gains tax liabilities by selling securities (such as stocks or bonds) for losses.

In other words, you will sell stocks or bonds in a loss to reduce your tax bill.

You can obtain credit for the realised gains (actual profits) of your portfolio by selling investment products that have unrealised losses (showing only paper losses) through tax loss harvests.

Then, the assets sold are replaced with similar assets to maintain asset allocation in the portfolio.
Examples of loss-taking strategies include:

Since it may seem complicated, let's take an example to help explain the concept.
Let's say you bought 100 shares of A's stock for $ 50 a share.

(Initial investment of $ 5,000). It also assumes that you bought 100 shares of company B at $ 60 per share (initial investment is $ 6,000).

Two years later, A's stock is $ 30 per share (current investment is $ 3,000) and B's stock is currently $ 100 per share (current investment is $ 10,000).

When you sell Company B, you pay taxes on the actual profit of $ 4,000 (current value $ 10,000 - initial value $ 6000 = $ 4000).

If you sell 100 shares of A company for tax relief, you will have a capital loss of $ 2,000 (current value of $ 3,000 - initial value $ 5,000 = - $ 2000).

You can use the $ 2,000 loss you receive from A to offset the $ 4,000 profit you receive from B.

So instead of paying $ 4,000, you have to pay $ 2,000.   You can then purchase the shares of Company C (another company, but a similar company) using the proceeds from the sale of Company A ($ 3,000).

Pay attention to most sales (Wash sales).  Pay attention to "best selling". One thing to watch out for is 'best selling'.

Most trading occurs when you buy shares or securities that are virtually identical within 30 days before or after you lose your stock or securities and within 30 days of sale.

You will not want to participate in the "best selling" casually. This IRS rule is implemented to prevent people from playing the system.

Basically, it means that you can not buy it again immediately after you sell the company A shares and receive the tax benefit only. If you do so, the damage will not be recognised.

However, if you sell one stock (company A) and buy one stock from the same industry (company C), you can claim the damage. However, there is no stock in the same company as before.
The loss-harvesting strategy is not working.

Tax relief The main purpose of harvesting is to defer income tax. There is no tax reduction effect.

For example,

 if you repurchase 100 shares of A's stock for $ 35 a share and the value of A's shares increase to $ 75 a share 30 days after the sale to eliminate the "wash sale .

You will now have to pay taxes on the $ 4,000 capital gain, not $ 2,500 (present value - $ 3,5000 = initial value = $ 3,5,000).
- If you have not previously sold stocks, the initial value is $ 5,000 = $ 4,000.

With the tax cuts harvested today, you will receive a tax relief and you will be putting off your tax on future income later.

The higher the tax rate now, the greater the benefits. So the big beneficiaries include high-income investors, high-income investors like California and New York.

Tax reduction is not beneficial if it is thought that it will be at a higher tax rate in the future or that the transfer income tax rate will increase in the future.

Adding tax loss is a strategy that applies only to taxable investment accounts. It does not apply to accounts accruing from IRAs or other taxes.

Finally, we will not recommend selling securities for losses solely for tax purposes.
When looking for tax loss reserve sales options, consider the following investments:

  • It does not fit your strategy anymore.                                                                                                    
  • Prospects for future growth are not good.                                                                                                                                              
  • You can easily replace it with other investments that play a similar role in your portfolio.                                                                                                                                                                                                                                                              

Because tax deduction can be very complicated, we recommend that you consult with a financial advisor or tax expert who is familiar with the field.


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