As investors making money is the best, but losing it hurts twice as much. In fact if our investments slip into the red it can be tempting to throw in the towel, the prospect of further losses too worrying to face. This is when emotional intelligence and self-discipline become the key to investing success. If we are buying quality companies for the long term we should not worry about short-term falls in value.
To illustrate the point consider that most of us equity investors will also own a home. If you are a homeowner do you obsessively try to check the value of your home on a daily basis? Phone the estate agent every few hours? Decide you have to sell the home tomorrow and head for the hills? Hopefully not. So think of your equity investments like your home, only with an income and without the mortgage.
Here are some potential equity investments that pay reasonable dividends with great long-term prospects.
SEEK Limited (ASX: SEK) is an internet business with some exceptional growth prospects. Seek.com is so ubiquitous it seems to have become part of the Australian vernacular and its looking to repeat that success in some mega-markets like Brazil and China. Those attempts are covered in this excellent article by Motley Fool contributor Claude Walker. Based on forecast earnings for FY 2014 the group trades on a forward price-earnings of about 27, that's not cheap, but given the growth runway it looks the kind of company long-term investors should own.
Ageing populations mean long-term investors should consider healthcare stocks and one with an exciting growth trajectory is ResMed Inc (ASX: RMD). Its products treat sleep disorders which are said to impact around 20% of the world's adult population. It has a truly global footprint, with 95% of revenues coming from outside Australia across all the major continents. In August it announced its 74th consecutive quarter of revenue growth, with strong management and the potential to expand margins there's almost no reason not to feel positive about this company's potential. It announces Q2 FY 2014 earnings on 23 January in the United States.
Another business geared to grow is Westfield Retail Trust (ASX: WRT). The Lowy family's Westfield shopping centres are popular cathedrals to the consumer age and investors who understand the twin Australian loves of shopping and property would identify it as a great investment. It pays an attractive dividend while trading on a reasonable price-earnings of about 15.
Foolish takeaway
Of course smart investors know there's occasionally times to take profits. If an investment's performance is making you repeatedly punch the air with delight as though you've just made a Test-match hundred at the MCG, it may be time to consider whether some irrational exuberance has acted on the stock's valuation. Otherwise, sticking with quality companies over the long term will put you on the highly-lucrative path to investing success.
