Best Long-Term Stocks to Invest in – Safe & Profitable Picks

Abhishek Tehlan, a 29-year-old from Dwarka, Delhi, completed his MBA in Finance and joined an MNC. He was motivated to build long-term wealth, and he researched top Indian stocks and chose the following based on strong fundamentals:

Example: 

• Reliance Industries (RIL): Revenue of ₹9.75 lakh crore and a net profit of ₹79,020 crore in FY24, with a major focus on Jio's 5G rollout, expanding to 7,000+ cities.
  
  
• Tata Consultancy Services (TCS): TCS has a global client base and posted a net profit of ₹43,559 crore with revenue of ₹2.41 lakh crore for FY24. The company made a 24.91% return over the past year.
  
  
• Infosys Ltd: Revenue of ₹1.56 lakh crore and net profit of ₹26,233 crore, with a solid push towards cloud and AI services, showing strong growth in these segments.

Abhishek diversified his portfolio with these stocks, confident they would deliver solid long-term returns.

What are Long-Term Stocks & Why Invest in Long-Term Stocks?

Let’s see an example, Reliance Industries' strong financial health can be seen by its FY24 revenue of ₹9.75 lakh crore and net profit of ₹79,020 crore. Stocks in companies like this that investors are interested in keeping for at least five years are known as long-term stocks. For investors to gain the long-term benefits of steady growth and an increase in capital, this investing strategy concentrates on companies that have solid financial health, distinct competitive advantages, and opportunities for development.

Why Invest in Long-Term Stocks?

• Potential for Higher Returns: Equities have previously yielded larger returns over longer time periods than other asset classes, such as bonds or savings accounts. 
  
  
• Compounding Returns: Long-term investors can benefit from the compounding effect, where returns on investment generate additional gains over time, significantly improving wealth accumulation. 

For example: If an investor buys Tata Consultancy Services (TCS) stock at ₹3,000 per share and holds it for 5 years, with an annual return of 24.91% (as seen in its 1-year return), their investment would grow significantly. After 5 years, that ₹3,000 investment would turn into approximately ₹9,034 due to the compounding effect. 

• Reduced Impact of Market Volatility: Holding stocks for the long term allows investors to ride out short-term market fluctuations, focusing on the overall upward trajectory of the market.
  
  
• Lower Capital Gains Taxes: In many jurisdictions, including India, long-term capital gains are taxed at lower rates than short-term gains, providing tax efficiency for long-term investors. ​
  
  
• Cost-Effectiveness: Long-term investing reduces transaction fees and other costs associated with frequent trading, as investors make fewer buy and sell decisions.

By adopting a long-term investment approach, investors can align their portfolios with their financial goals, leveraging the benefits of sustained growth, compounding, and tax efficiency. Conducting thorough research and selecting companies with strong fundamentals is essential to maximising the potential advantages of long-term stock investments.

Reasons to Invest in Long-Term Stocks

Long-term stock investing has several benefits that support wealth accumulation and financial objectives. According to the Securities and Exchange Board of India (SEBI), early and consistent investing is crucial for reaching financial goals and accumulating retirement money.

Key Benefits of Long-Term Stock Investments:

• Compounding Returns: Long-term investments allow earnings to generate earnings, leading to exponential growth over time.
  
  
• Reduced Impact of Market Volatility: Holding stocks over extended periods helps mitigate the effects of short-term market fluctuations, as markets tend to stabilise and grow in the long run.
  
  
• Lower Transaction Costs: Fewer trades reduce booking fees and taxes, enhancing overall returns.
  
  
• Tax Efficiency: In India, long-term capital gains (LTCG) on stocks held for over a year are taxed at 10%, whereas short-term capital gains (STCG) are taxed at 15%, making long-term investments more tax-efficient.
  
  
• Alignment with Financial Goals: Long-term investments are suitable for achieving significant financial milestones, such as retirement, children's education, or purchasing a home.
  
  
• Diversification Opportunities: Investing across various sectors and industries spreads risk, reducing the impact of any single investment's poor performance.
  
  

This long-term investment strategy allows individuals to incorporate these benefits to build wealth and secure their financial future. To maximise the advantages of long-term investing, it's essential to conduct thorough research and select stocks with strong fundamentals.

Key Factors Affecting Long-Term Stocks

Best Long-Term Stocks in India

Disclaimer: All stock data in the table is sourced from Google Finance. We recommend verifying financial information through additional trusted resources before making investment decisions.

Factors to Consider Before Investing in Long-Term Sector Stocks in India

Financial Goals:

• Clearly define your investment objectives, such as purchasing a home, funding education, or building retirement savings.
  
  
• Align your investment choices with these goals to ensure appropriate asset allocation.

Investment Horizon:

• Determine your investment timeframe, as a longer horizon allows you to benefit from compounding and weather market volatility.
  
  
• Long-term investments can help achieve substantial growth over time.

Risk Appetite:

• Assess your comfort with potential fluctuations in investment value.
  
  
• Higher potential returns often come with higher risks; ensure your portfolio matches your risk tolerance.

Investment Knowledge:

• Educate yourself on investment basics, starting with straightforward options before exploring more complex instruments.
  
  
• Understanding your investments helps in making informed decisions and managing risks effectively.

Safety, Returns, and Liquidity:

• Balance the safety of your capital, the expected returns, and the required liquidity.
  
  
• Diversify your portfolio to manage these aspects effectively.

Asset Allocation:

• Decide how to distribute your investment capital among different asset classes based on your goals and risk profile.
  
  
• Regularly review and adjust your allocations to stay aligned with your objectives.

Tax Implications:

• Understand the tax treatment of different investments, as taxes can significantly affect returns.
  
  
• Be aware of benefits like deductions under Section 80c for specific investments and capital gains taxation.

Review of Investments:

• Regularly monitor your investment portfolio to ensure it remains aligned with your evolving financial goals and market conditions.
  
  
• Adjust your holdings as necessary to maintain your desired asset allocation and risk profile.

You can choose investments that are in line with your risk tolerance and financial goals by carefully considering all of these factors.

Challenges & Risks in Long-Term Stocks

Future of Long-Term Stocks in India

India's stock market looks to have a bright future thanks to strong economic growth, carefully planned government policies, and a thriving corporate sector.

Sectoral Growth Opportunities:

• Information Technology (IT): Companies like Tata Consultancy Services (TCS) and Infosys are well-positioned to benefit from the global shift towards digitalisation, cloud computing, and artificial intelligence.
  
  
• Renewable Energy: With India's commitment to achieving 500 GW of renewable energy capacity by 2030, companies in the solar and wind energy sectors are expected to experience significant growth.
  
  
• Healthcare: The healthcare sector is poised for expansion due to increasing demand for medical services and the government's focus on healthcare infrastructure. Companies like Sun Pharmaceutical Industries and Dr. Reddy's Laboratories are notable players.

Market Positioning:

• Emerging Market Status: India's growing weight in global indices reflects its increasing importance as an investment destination. The country's market weighting in the MSCI emerging markets index has risen to nearly 20%, approaching China's 25%.

Government Initiatives:

• Infrastructure Development: The government's emphasis on infrastructure projects, including transportation and smart cities, is likely to boost companies involved in construction and related industries.
  
  
• Policy Reforms: Regulatory changes aimed at enhancing the ease of doing business and attracting foreign investment are expected to create a more favourable investment climate.

Who Should Invest in Long-Term Stocks?

• Have a Long-Term Investment Horizon: Equity markets can be volatile in the short term, but historically, they have provided favourable returns over extended periods.
  
  
• Can Tolerate Market Fluctuations: Long-term investors should be prepared for market ups and downs and avoid making impulsive decisions based on short-term market movements.
  
  
• Seek Capital Appreciation: If your primary goal is to grow your wealth significantly over time, investing in stocks can offer higher return potential compared to traditional savings instruments.

It's important to conduct thorough research or consult with financial advisors to make sure long-term stock investments fit your unique financial goals and circumstances.

How to Invest in Long-Term Stocks?

1. Open a Demat and Trading Account:

• Demat Account: This account holds your securities in electronic form. To open a Demat account, approach a SEBI-registered Depository Participant (DP), such as a bank or a financial institution.
  
  
• Trading Account: Necessary for buying and selling securities on stock exchanges. Open a trading account with a SEBI-registered stockbroker.
  
  
• Bank Account: Essential for facilitating transactions related to your investments.

Ensure you complete the Know Your Customer (KYC) process, which involves submitting identity proof, address proof, and photographs. For detailed guidelines, refer to SEBI's instructions on Securities Market Investment: Start Investing.

2. Understand the Costs Involved:

• Account Opening Charges: Fees for opening Demat and trading accounts, which can vary depending on the service provider.
  
  
• Annual Maintenance Charges (AMC): Recurring fees for maintaining your Demat account.
  
  
• Brokerage Fees: Charges by brokers for executing buy or sell orders, which can be a flat fee or a percentage of the transaction value.
  
  
• Taxes and Other Charges: Such as Securities Transaction Tax (STT), Goods and Services Tax (GST), stamp duty, and transaction charges levied by stock exchanges.

3. Develop a Sound Investment Strategy:

• Define Financial Goals: Determine your investment objectives, such as wealth creation, retirement planning, or funding education.
  
  
• Assess Risk Tolerance: Understand your capacity to endure market fluctuations without compromising your financial stability.
  
  
• Educate Yourself: Gain a basic understanding of the stock market, investment products, and the factors influencing market movements.
  
  
• Diversify Portfolio: Spread your investments across various sectors and asset classes to mitigate risks.
  
  
• Regular Monitoring: Keep track of your investments and make necessary adjustments in response to market changes or shifts in your financial goals.

4. Stay Informed and Vigilant:

• Do’s and Don'ts: Familiarise yourself with the best practices and common pitfalls in securities market investments.
  
  
• Beware of Frauds: Be cautious of unsolicited advice, Ponzi schemes, and unregistered investment products.
  
  
• Keep Records: Maintain thorough records of all transactions, communications, and documents related to your investments.

For detailed guidelines, refer to SEBI's Securities Market Investment: Do’s and Don’ts.

5. Consider Professional Assistance:

• Financial Advisors: If you're new to investing, consider consulting with SEBI-registered investment advisors to receive personalised guidance tailored to your financial situation and goals.
  
  
• Educational Resources: Participate in investor education programs and workshops to enhance your understanding of the securities market.

SEBI offers a range of educational materials and resources to help investors make informed decisions. Explore their Investor Educational Material for more information.

6. Utilise Online Resources and Tools:

• Stock Market Simulators: Practice trading without real money to build confidence and experience.
  
  
• Calculators: Use tools like the Asset Allocation Calculator provided by SEBI to plan your investment distribution effectively.

7. Adhere to Regulatory Guidelines:

• Regulatory Compliance: Ensure all your investment activities comply with the regulations set forth by SEBI and other financial authorities.
  
  
• Reporting and Transparency: Be aware of the reporting requirements for your investments and maintain transparency in all financial dealings.

Final Thoughts: Should You Invest in Long-Term Stocks?

Long-term stock investing has the potential to yield large returns, capital appreciation, and compounding benefits, making it a lucrative wealth-building approach. But it takes perseverance, a long-term outlook, and the capacity to manage market turbulence. 

Making long-term stock purchases might be a wise decision if your financial objectives coincide with these considerations. Always be sure that the rewards are in line with your risk tolerance, diversify your investments, and conduct in-depth research.

Frequently Asked Questions

Q. Is it safe to buy in shares for the Long Term?

Long-term share investing is a reasonably secure investment strategy since it enables buyers to take advantage of the compounding benefits of consistent profits over a longer period and manage short-term market fluctuations.

Q. Is it worth buying shares for the short run in 2025? 

Although short-term trading can yield rapid profits, it also entails greater dangers and requires a more active approach to firm selection and market preparation.

Q. How much should I put in short-term stocks?

Your whole investment plan, risk tolerance, and financial goals will influence how much you should spend on short-term equities. 

Q. Are these shares suitable for thrifty investors?

The utility of these shares for conservative buyers depends on personal risk tolerance and financial goals, even if long-term buying is typically thought of as a more conservative approach than short-term selling.