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Invest for the Long Term for Better Retirement Results

Published on February 26, 2015

Starting Young

The younger investors are when they start saving for retirement, the more risk they can absorb in terms of their investments. After all, they have a longer period of time to make up any missteps or losses in retirement funds. However, investment author Marc Lichtenfeld has a different take on this. (His book about long-term investing is “Get Rich with Dividends: A Proven System for Earning Double-Digit Returns.”)

In a recent article written for the Oxford Club, Lichtenfeld—the organization’s chief income strategist—stated that it is also true that you can still build significant retirement wealth over the long term by being more conservative in your investments. Lichtenfeld agrees that investing in vehicles that yield higher returns, and doing so over the long term, will reap more retirement rewards but speculation and higher-risk investments are not for everyone. Therefore, showing the individual that he/she can still build up significant retirement savings by being a bit more conservative over time can help reluctant savers get started early.

The Conservative Approach

Here’s what Lichtenfeld says: “I don’t particularly recommend being conservative for decades, but for some people who are not comfortable with much risk, investing conservatively may make sense. And knowing that they can invest conservatively and still hit their goals may be just what it takes to get them to commit to investing for the long term.” He uses a 30-year investment horizon for his examples.

Lichtenfeld also points out that the conservative approach means careful planning around the investment time period as well as the rate of return on the investments. Depending on the individual’s savings goal, that long-range conservative investing could mean investing more per year or finding investments that earn more than the market average in order to reach that goal—while other investors who are taking more risk may spend fewer years reaching the same dollar figure.

Long-term Investing

The bottom line in Lichtenfeld’s argument is that long-term investing is key to building up your retirement savings. This gives individuals the opportunity to mix in some more speculative assets within their retirement plans if they are comfortable doing so. And of course, for those who have a self-directed retirement plan, they may include a range of alternative assets to build up their retirement nest egg.

Self-directed investors know and understand alternative assets that may provide potentially more lucrative returns than typical stocks, bonds and mutual funds. Opening a self-directed retirement plan early on in one’s working life, and contributing on a regular basis for many years, gives investors the time to reach their retirement goals. Of course, choosing investments that yield a healthy return is one important factor, but it’s the length of investing time that Lichtenfeld feels is crucial to developing a healthier retirement account.

For those who are comfortable making their own investment decisions, and wish to include nontraditional investments within their retirement plans, self-direction can be a powerful way to build that nest egg at any time. To get started, the professionals at Next Generation Trust Services can answer your questions and you can read about self-directed IRAs and other retirement plans in our white paper,