A guide to the best investments for long term investors
The expression “long term” isn’t a particularly popular one in an era where everyone wants fast results. How rapidly can I lose weight? Can I build muscle fast? How soon can I make a ton of money? Patience is a dying art. That’s the era we live in. Leave now, if the term “long term” turns you off. But when it comes to long term investments, by nature, patience is key.
But don’t be mistaken. Short term gains can be obtained with insider knowledge, luck or great timing. But such investments are fraught with risk. Longer term investing, however, can deliver consistent results and the stats are there to prove it. So, what is long term investing?
What you will learn
- Why long term investing is a proven path to building wealth
- The benefits of Stocks & Shares ISAs, pensions, and property
- How time in the market beats timing the market
- The importance of patience and consistency
- Key considerations before choosing where to invest
What is long term investing?
This approach involves holding onto an investment for an extended period, typically 5 years or longer, 10 years being the sweet spot. Typically, this is referred to as time in the market. It involves allowing your investment the time to grow through compounding, rather than trying to time the market for short term gains.
Typically, you buy and hold, better still, buy, keep buying and forget, holding your nerve through market ups and downs. This is one of the most proven ways of accumulating real wealth over time.
Why does it matter?
Long term investing is ideal for retirement planning and legacy building. It can help you achieve future goals like purchasing property or having enough to pay for school fees. But a strong constitution, discipline, patience and a stoic mindset are crucial.
It doesn’t pay to be derailed by emotional decision making, boredom or by short term incidents that may sway one’s staying power. Being in it for the long haul is easier said than done and a real test of commitment. So, which investments are best for the long term investor?
What are the best long term investments?
In this article, we focus on:
- Personal pensions and SIPPs
- Stocks & shares ISAs
- Property
1. Personal pensions and SIPPs
Think of these as long term savings plans with the added benefit of tax relief. This is one of the main reasons why pensions are a solid long term investment. You can invest lump sums or make regular contributions.
With a personal pension, you can access a wide range of investments, including fund managers and index funds. If you’re looking for more flexibility or specialist options, such as exchange-traded funds (ETFs), a self-invested personal pension (SIPP) might be more suitable.
With capital being tied up until your later years, the risk of blowing your money too early is greatly reduced. If you’re interested in long term investing or investing for retirement, a personal pension or SIPP is near unbeatable.
2: Stocks and shares ISAs
It’s been proven that a diversified portfolio of stocks and shares can provide reliable long term returns. Doing so via an ISA makes financial sense because ISAs are tax-free, meaning gains are free from income and capital gains tax.
Because of the investment risk associated with Stocks & Shares ISAs and the bewildering number of options out there, we would recommend getting independent financial advice prior to purchasing.
Related reading: The benefits of long-term investing in ISAs and pensions
3: Property
The shine has gone off buy-to-let recently, due to a combination of factors including increased taxation, stricter regulation, and rising mortgage interest rates, making it less profitable and more challenging for landlords.
Changes in mortgage interest relief, stamp duty, and other tax rules have significantly reduced the financial benefits of buy-to-let investments. Furthermore, new regulations aimed at improving energy efficiency and tenant protection are adding to the costs and complexities for landlords.
There are ways around some of these factors, like buying through a limited company. Nonetheless, buy to let has proven time and time again to provide good long term results and still makes our top three.
Comparing these long term investment options
If you’re wondering which long term investments are worth considering, the table below offers a quick comparison of the aforementioned options.
Each option has its balance of risk, liquidity, and tax advantages, helping you choose the right fit for your long term goals.
| Investment type | Time horizon | Risk level | Liquidity | Tax benefits |
|---|---|---|---|---|
| Stocks & Shares ISA | 5–10+ years | Medium–High | High | Yes: tax-free growth |
| SIPP / Personal Pension | 10–30+ years | Medium | Medium | Yes: tax relief & tax-free growth |
| Buy-to-Let Property | 10+ years | Medium | Low | Limited: depends on the structure |
Looking to your financial future
Start early and stay invested. The best time to invest was several years ago. The second-best time to invest is now.
Whether you’re saving for retirement, building long-term wealth, or planning for future goals like property or education, consistency is key. Long term investing rewards patience, discipline, and time in the market, not short-term speculation.
Choose investments that match your goals, use tax-efficient wrappers like ISAs and pensions, and stay focused on the bigger picture.
Take action, sit tight, and be patient for the best results.
Long term investments – factors to consider
- What are your investment objectives?
- How much risk are you willing to accept?
- Will you need access to your capital before retirement?
- Are you using tax-efficient wrappers like ISAs and pensions?
- Do you prefer lump sum investing, monthly contributions, or both?
FAQs
Looking to broaden your knowledge of the best type of long term investments? Read our short selection of frequently asked questions.
What are the best long term investments for retirement?
The most effective long term investments for retirement include personal pensions, SIPPs, and Stocks & Shares ISAs. These options provide tax advantages, access to diversified investment portfolios, and the potential for compound growth over time.
Why is time in the market important?
Time in the market allows your investments to grow steadily, riding out short-term volatility. Long term investors benefit from compound growth and tend to outperform those who try to time the market, which carries a high risk of missing key growth periods.
Is property still a good long term investment?
Despite recent tax and regulatory changes, buy-to-let property remains a solid long term investment. It offers the potential for rental income and capital appreciation, especially when structured through a limited company to maximise tax efficiency.
Are Stocks & Shares ISAs suitable for long term investing?
Yes, Stocks & Shares ISAs are well suited to long term investing. They offer tax-free growth and the flexibility to choose your level of risk and investment strategy. Used consistently, they can form a significant part of a long-term wealth plan.
How do pensions compare with other options?
Pensions are highly tax-efficient and purpose-built for long term investing. Contributions benefit from tax relief, and investments grow free from income and capital gains tax. While access is restricted until age 55 (rising to 57), this helps preserve long term savings for retirement.
