5 Best Long-Term Investment Strategies for 2025

“Good things come to those who wait.”

Haven’t you heard that time and again? There is a reason some sayings stand the test of time and are used across the globe. Because they hold real value. In the world of investing, this could not be truer. Long-term investing is where you put your money to work and give it time to grow. This is a time-tested strategy trusted by seasoned experts.

Why does it work? Because long-term investments help you:

• Ride out market fluctuations
• Weather short-term volatility
• Encourage consistency and discipline
• Offer compounding returns

Let’s explore the 5 best long-term investments you can consider in 2025.

Below are 5 long term investment strategies you need to know about in 2025:

1. Add some small-cap stocks to your investment portfolio to participate in the growth of emerging companies

Stocks are typically classified by market capitalization, which is basically the total market value of a company’s outstanding shares. There are three main categories:

• Large-cap stocks: These are stocks from companies that have a market cap of $10 billion or more. They are usually well-established businesses with a long and stable track record, like Amazon, Microsoft, and other big names.
• Mid-cap stocks: These companies have a market capitalization of between $2 billion and $10 billion. They are not as big as large-cap companies, but they are a step above small-cap.
• Small-cap stocks: These range from about $250 million to $2 billion in market value. These are usually younger companies, such as startups, that are still growing and finding their footing in the market. This is the segment you can explore for long-term investing.

Now, here is the key point – small-cap stocks come with more risk, but they also offer more potential for reward. Unlike large-cap companies, which have already captured a sizable chunk of the market, small-cap firms are just getting started. So, they have more room for growth. If you have ever wondered how different your life would be if you had invested in a big name like Amazon or Apple back when these companies were starting out, small-cap stocks are a good fit for you!

Of course, not all small-cap stocks grow to be the next big thing, and these companies may face a number of challenges along the way. For instance, small companies usually do not have the same financial resources as larger firms do. As a result, they may not survive economic downturns as easily, and their stock prices can be a lot more volatile. So yes, it is riskier to invest in them, but these companies also hold the potential to grow, and you could be rewarded for your patience down the line. That is why small-cap investing is best approached with a long-term mindset. If you are okay riding out some ups and downs along the way, small-cap stocks could give your investment portfolio a real boost.

However, if you are concerned about the risk, do not go all in. You can start by allocating a small portion of your portfolio between, say, 10% to 20% to small-cap stocks. Make sure to research well and even consult with a financial advisor to ensure you place careful bets and understand the company and sector-specific risks.

But the bottom line remains the same. If you are willing to take a few calculated risks and stay the course, small-cap stocks can be a powerful tool.

2. Do not neglect the obvious choices – 401(k) and Individual Retirement Account (IRA)

Sure, when you Google investment options, a 401(k) or an IRA might seem like the most basic answers out there. Maybe your friend already has one. Maybe your financial advisor talks about them non-stop. But here is the thing – these obvious choices are still around for a reason. They work. And if you are serious about building long-term wealth, you should not overlook them.

Let’s start with the 401(k). If your employer offers one, you can start investing right away. One of the biggest perks? The employer matches! Your employer contributes extra to your retirement account based on how much you put in. This is invested in the market along with your contributions, so you essentially get free money, which compounds over time and offers better returns.

Then there is the tax advantage, which is the real magic of both 401(k)s and IRAs. You get two main variants in both these accounts – Traditional and Roth. With a Traditional 401(k) or IRA, your contributions are tax-deductible, which lowers your taxable income in the present. Your money grows tax-deferred, and you pay taxes only on your withdrawals in retirement. With a Roth 401(k) or Roth IRA, it works the other way. So, you contribute after-tax dollars now, but your money grows tax-free, and you pay no taxes when you take it out in retirement.

Another reason these accounts may be the best long-term investment strategy? They are built to encourage long-term investing, which makes it easy to follow through. You cannot take the money out penalty-free until you are 59½ (with some exceptions). So, you cannot be tempted to dip into your accounts and can keep your long-term goals on track.

Also, both 401(k)s and IRAs are incredibly flexible. You can choose what to invest in, such as stocks, bonds, index funds, target-date funds, etc. You can diversify your portfolio inside your retirement account and even adjust it as your risk tolerance or goals change over time.

So, if you are still doubting the impact a 401(k) or IRA can have on your financial planning, stop hesitating and consider adding them to your long-term investment strategy.

3. Explore long-term investing strategies like investing in value stocks

Who does not love a good bargain? Getting a good bargain may pretty much be the whole idea behind value investing. Value stocks are issued by companies that are trading for less than what they are actually worth. These companies might not be at the top just yet, and their stock prices may be low, even though their actual performance is good. As a value investor, your goal is to spot these gems before the rest of the world comes on board and buy them at a bargain.

Why should you consider value stocks as part of your long-term investment strategy? Here are a few reasons:

• They offer growth potential over time: You buy a value stock when the stock is undervalued and wait for the market to eventually realize its worth. Stock prices can rise steadily over time and reward you in the future. However, this is a strategy that requires patience.
• You could earn steady dividends: A lot of value stocks are from companies that pay out regular dividends to shareholders. So, you can create a passive income stream along the way by investing in them.
• They tend to be less volatile: Since value stocks are usually from stable companies, they are not very volatile, which helps lower portfolio risk.
• They can help during market downturns: Thanks to their stable nature, value stocks can be a good hedge against volatility and economic uncertainty.

Now, while you may be tempted to explore value stocks, you need to understand one thing – figuring out the true value of a stock is not always easy. It takes research, financial analysis, and some understanding of metrics like price-to-earnings ratios. If this sounds intimidating, instead of selecting value stocks on your own, team up with a financial advisor. They can help you identify which value stocks are actually promising and suitable to be a part of your portfolio.

4. Invest in real estate – residential, commercial or Real Estate Investment Trusts (REITs) to diversify your portfolio

Real estate is a good long-term investment strategy that can help you diversify your portfolio, generate regular income, and build wealth for your future heirs, too. And yes, it requires patience, but the rewards can be substantial if you play your cards right.

When you invest in real estate, whether it is residential property, commercial space, or through REITs, you can benefit from both price appreciation over time and steady rental income.

Looking for tangible assets? Explore residential and commercial real estate.

Let’s talk about buying physical property first. Residential properties like a condo or villa can provide long-term gains. You can buy a property, rent it out, and over time, not only do you earn rental income, but the property also typically increases in value. So, there is a dual benefit. Just keep in mind that real estate takes years, sometimes decades, to deliver its full potential.

Commercial properties like office spaces, parking lots, etc., usually offer higher rental yields, but they can also require more capital and a little more experience and time to manage the investment.

There is only one downside here, which is that real estate is not easy to get into. You will need a significant amount of money upfront for the purchase, maintenance, insurance, etc. But on the flip side, you are the one in charge. If you like calling the shots and managing things on your own, real estate offers that control.

Don’t want the hassle? Try REITs.

Now, if you are interested in real estate but not so thrilled about managing things on your own, REITs might be your best bet. They are similar to mutual funds, but they invest in real estate. You can buy shares of a REIT just like you would any stock. REITs pay regular dividends and allow you to invest in real estate with a much lower entry point. They are also more liquid than physical real estate, and you can buy and sell them easily on the stock market.

Real estate comes with tax perks, too. In fact, one of the biggest advantages of real estate is its tax benefits. For instance:

• Mortgage interest deductions: If you own a home, you can deduct the interest on your mortgage.
• Depreciation: Real estate investors can depreciate residential property over time and claim tax benefits. The cap is 27.5 years for residential property. So, you can depreciate your property and reduce your taxable income even if the property is actually making money.
• 1031 Exchange: This Internal Revenue Service (IRS) rule allows you to defer capital gains taxes if you sell a property and use the sales proceeds to buy another one.

Add it all up, and real estate offers something unique – the potential for long-term wealth, regular income, control, and tax savings.

5. Lower the risk by adding some bonds – Treasury Inflation-Protected Securities (TIPS), municipal, government, and corporate

All long-term investment strategies are incomplete without a healthy dose of stability. So last but not least, you may explore bonds. Now, bonds may not be known for their jaw-dropping returns like stocks or real estate, but what they offer is something equally valuable. They give your portfolio stability.

And the good news? You have options. Let’s walk through a few types of bonds you can consider to balance your portfolio:

• TIPS: If you are worried about inflation eating into your savings, TIPS can help. These bonds are issued and backed by the U.S. government, so they are considered very safe. They adjust the principal value based on changes in the Consumer Price Index (CPI). So, as inflation rises, so does your investment’s value. The only catch? Their yields are generally lower than other bonds.
• Treasury bonds: Treasury bonds have maturities of 10, 20, or even 30 years. These are also issued by the U.S. government, and like TIPS, they are backed by the government, which makes them very low risk. However, their returns are modest, which makes them suitable for conservative investors.
• Corporate bonds: If you are willing to take a bit more risk for better returns, corporate bonds might be your thing. These are issued by companies looking to raise money, and since they are not government-backed, they come with a higher risk but also higher yields. They can be useful for younger investors with a high-risk appetite.
• Municipal bonds: These bonds are issued by states, cities, or local governments, which makes them relatively safe. One of their biggest perks is the tax benefit. The interest earned on many municipal bonds is exempt from federal income tax. In some cases, it may also be exempt from state and local taxes.

So, what is the best investment for 2025?

The best investment for 2025, or any year, really depends on your financial goals, your risk tolerance, your time horizon, income, age, and other factors. As with all things, personalization is key, and your portfolio has to be tailored to your needs. So, evaluate your portfolio and see what is missing. Consider your goals and ask yourself what can add value and help you move closer to those goals.

Also, speak to a financial advisor for better clarity on what is the best long-term investment strategy for you. WiserAdvisor’s free advisor match tool can match you with 2-3 experienced advisors who can help build a long-term investment portfolio.

And remember, Rome was not built in a day. So, be patient while exploring these long-term strategies.