Stocks tend to be great investments over the long-term. If you choose the right companies to invest in you don’t have to worry too much about how your portfolio is doing. On the other hand if you choose to speculate using CFDs and binary options, you might end up losing your money. This is the investment reality, long-term investors tend to do much better because they hold their stocks for the long-term.
If you trade stocks you have to worry all the time, what their price is and be on top of any news that might come out. With long-term dividend investing, you just need to focus on finding new stocks to put your money to work. The difference in mentality and stress level is incomparable. On one hand you are profiting from small movement in stock prices, that might lose you money. On the other hand you are jeopardizing your entire portfolio, because any sudden movement can cause you to lose your money.
Focus on the long-term
By focusing on the long-term, you avoid having to deal with all the unpleasant things that come with daily trading. It relieves you from stress and extra daily work. Focusing on the long-term also allows for mistakes to correct themselves. If you start a short-term trade that goes bad, you will certainly lose money. But even if you make a mistake while investing for the long-term, you can always wait until the stock price recovers. Daily price fluctuations have very little meaning in the overall grand scheme of things. They are only important for those who depend on them. That is why the long-term focus allows you to filter all the noise of small intraday moves that have no correlation to how the underlying company is doing.
Dividends are great
Dividends are another way of capturing some more income through long-term investing. Every year some companies distribute some of their profits to shareholders, and this is a great way for you to add some income on top of your salary. By choosing the right companies that continuously increase their dividends you can capture a lot of returns. Focus on stable and reliable companies, whose products or services are not going out of business anytime soon. Coca-cola FEMSA is one of those companies, with reliable and predictable cash flows. Reinvesting your dividends is also another great way of increasing the compounding effect of your portfolio.