3 long-term investments you’ll thank yourself for later

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Someone is sitting in the shade today because someone planted a tree a long time ago. –Warren Buffet

Why settle for good results in your investments when you could get great results? No matter how you manage your financial life today – or your life in general – you can probably do better if you make some long-term investments. Here are three such investments you’ll thank yourself for later.

Image source: Getty Images.

1. Invest in your brain

The best way to become a better investor is to become a savvy investor. The more you know, the more wise investment decisions you will make. Here are some great ways to get smarter in the stock market:

  • Read good books on investing, like John Bogle’s The Little Book of Common Sense Investingby Peter Lynch One Up on Wall StreetJoel Greenblatt The little book that always beats the marketand The Motley Fool Investing Guide by David and Tom Gardner.
  • Read good books on money and psychology, like The psychology of money by Morgan Housel, Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions by Dan Ariely, and Nudge by Richard H. Thaler and Cass R. Sunstein.
  • Read about great investors and how they think, in books such as Richer, Wiser, Happier: How the World’s Greatest Investors Win in Markets and in Life by William Green, The Most Important Thing: Uncommon Common Sense for the Savvy Investor by Howard Marks, and Warren Buffett’s Essays: Lessons for American Business by Lawrence Cunningham.
  • Read articles on Fool.com, where you can find dozens every day covering interesting businesses as well as many investing and personal finance topics.
  • Learn how to make sense of financial statements such as the balance sheet, income statement, and cash flow statement. This will help you better understand how a business is really doing. If you want to get really good at it, consider taking an accounting course, and if you want in-depth training in security analysis, pursue a chartered financial analyst (CFA) designation. (It might even lead to a new career!)

As you learn, be sure to take note of common investing mistakes, so you don’t make them.

2. Invest in your health

Investing in your health might not seem like a way to get stronger financially, but your health and your wealth are linked. For one thing, poor health can be very costly and potentially present you with hefty doctor, hospital and pharmacy bills. It can also cost you years of your life.

To aim to minimize your health care expenses (especially those you’ll face in retirement), be sure to eat nutritious foods and stay or stay fit. The process of staying in shape can also be part of your financial education, as you could listen to great financial podcasts produced by smart people while you run, walk or cycle. (There are plenty of business podcasts and investing podcasts.)

A couple is outdoors, smiling at the camera.

Image source: Getty Images.

3. Invest in index funds

Both of the investments above will take effort and perseverance, but they can be worth it, boosting your financial and physical health. Here’s a third long-term investment idea for you that’s very simple and easy: Put a large portion or all of your long-term dollars into one or more low-cost, broad-market index funds.

If most or all of your investments are in index funds, you won’t need to spend a lot of time reading and learning how to invest, as your money will simply be spread across the same securities as the indices tracked by your funds. You won’t have to think about when to buy or sell a particular stock because as companies are added or removed from these indices, your money will be moved in or out of them for you.

Nor is index investing a compromise when it comes to investing. You could put a lot of effort into stock picking and still not outperform broad stock indices – indeed, many mutual funds managed by highly paid professionals underperform index funds. Even Warren Buffett recommended them to most investors.

Some low-fee index funds to consider are the SPDR S&P 500 ETF (NYSEMKT: SPY), Vanguard Total Stock Market ETFs (NYSEMKT: VTI)and Vanguard Total World Stock ETF (NYSEMKT:VT). Respectively, they will spread your dollars across 80% of the US market, all of the US market, or most of the global stock market. You could cost them an average amount over time, by investing a certain amount of money at regular intervals. The table below shows what you could harvest over time, if you average 8% annual returns:

8% growth for

$5,000 invested annually

$10,000 invested annually

$15,000 invested annually

5 years

$31,680

$63,359

$95,039

10 years

$78,227

$156,455

$234,682

15 years old

$146,621

$293,243

$439,864

20 years

$247,115

$494,229

$741,344

25 years

$394,772

$789,544

$1.2 million

30 years

$611,729

$1.2 million

$1.8 million

Data source: Author’s calculations.

Whether you act on one, two, or all three of these long-term investments, you’ll probably be very glad you did years from now. See which ones – and their benefits – interest you.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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