by Simon Wright

Created on: December 03, 2008   Last Updated: December 05, 2008

In life there are decisions that we take that are influenced by short-term desires and there are other decisions that we make with the longer-term in mind. With regards to our finances, in particular, this distinction becomes very important because investing over a prolonged period of time is the only realistic way (for most of us) to ensure that our future needs are properly catered for. What we class as long-term may differ from person to person, but generally I would argue that long-term is anything over ten years. Typically, we regard the long-term timeframe in relation to the age that we wish to retire, though this may not always be the case.

When we use the word "invest", it's important to note that we're not just talking about investing in the stock market. Buying shares may well be part of your overall investment strategy, however there are other options that we can also employ to grow our wealth. Pensions and savings accounts, for example, are two additional mechanisms that are likely to be part of a person's long-term investment strategy. Having clarified what is meant by the terms "long-term" and "invest", the next step is to outline the best ways that you can invest your money so that it will meet your long-term financial needs. I will outline some steps that you can go through, which should help to point you towards a strategy that will meet your needs. It is important, however, to stress the fact that the optimal approach will depend on your circumstances and your goals. There is no such thing as a generic all-encompassing "best way to invest" that can simply be copied by all and sundry.

Steps to develop your long-term investment strategy:

1. Agree what your long-term aspirations and dreams are: Before we even get into figures, it's important to think simply in terms of what lifestyle you hope to have at a future point. Maybe your goal is to be able to retire by the age of 55 and to have enough money to be able to live comfortably and be able to put your kids through college. Or maybe you want to be able to buy that dreams house in the country, or to be able to afford an around-the-world cruise.

The key thing here is that you are starting to piece together what's going to be important to you, so that you can then start to consider how financially challenging it will be to achieve.

2. Set yourself financial goals and targets: All too often in life, a failure to achieve what we wanted can be put down to the fact that we weren't rigorous enough in terms

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