You Might Be Considered 'Upper Class' If Your Portfolio Looks Like This

The phrase "time in the market is better than timing the market" might sound like a cliche, but it's an investment strategy followed by the world's wealthiest people — and, if paired with other good investing habits, it may propel you into the upper class. Long-term investing involves purchasing and holding onto assets that appreciate in value for at least seven to 10 years. However, the real rewards come the longer you let it grow.

The reason some of the best investors prefer long-term investments over trendy stocks or complicated strategies is due to the effect of compounding interest. Compounding means that your money earns returns not only on the original amount, but also on the gains it has already generated, allowing wealth to snowball over time. Because of its potential, compounding can be a great method to grow retirement savings if you have a long time ahead of you to invest. Take Apple stock as an example: If you invested $5,000 twenty years ago and are now nearing retirement age, that investment would be worth around $600,000 today.

If your goal is long-term wealth, one of the smartest moves may be to make simple yet reliable investments. Instead of chasing quick results from unreliable cryptocurrencies or trending stocks, focus on assets that have steadily increased in value over the years. Mutual and exchange-traded funds (ETFs) can be excellent options because they provide diversification and offer historically strong returns. For example, SPY, a popular ETF that tracks the S&P 500 index, has averaged around a 14% return every year for the last 10 years, according to Yahoo! Finance. Blue-chip stocks can also be a good choice, but they may require further diversification for a more complete portfolio.

Believe it or not, real estate can be another strong choice for long-term investing. Not only does property appreciate in value, but it can also generate steady rental income if you have an extra unit or second property. Beyond cash flow, real estate can be less volatile than the stock market at times, making it a preferred investment for some. Bonds, although they're associated with conservative returns, also have their place in long-term investing. They can provide stability during market downturns, which are bound to happen but don't last forever. By focusing on long-term investing, you'll give your portfolio the chance to grow — and hopefully reach that elusive upper-class status.