Investing lets you put money you’re not spending to work by helping businesses and governments grow, while earning compound interest. Over time, this can turn modest savings into a substantial nest egg, as long as you avoid some investing mistakes.

You may want to consider a long-term investment Invest for long-term growth if you have a goal that will take years or even decades to reach, such as retirement or saving for college. Your time horizon and risk tolerance will affect your investment strategy, which could include investing in stocks, bonds, exchange-traded funds (ETFs), mutual funds or individual securities.

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A longer time horizon gives you more time to ride out the highs and lows of the stock market, making it more likely that your investments will grow. It also reduces your need to sell during a market downturn, which can reduce your returns. Using best practices such as dollar-cost averaging and being a buy-and-hold investor can lower your investment costs, too. And, if you hold your stocks for more than a year, you’ll pay lower taxes—investors in lower tax brackets might qualify for 0% long-term capital gains tax rates.

Regardless of your long-term investment strategy, it’s important to diversify your portfolio and invest in companies with strong competitive advantages. That way, you can profit from powerful trends and companies that create products people want and need. For example, Alphabet’s dominance in online advertising and its wide user base for its Android operating system make it an attractive long-term investment.