Long Term Investments
Updated on March 16, 2023
Financial assets that are held for a long period are called long-term investments. Long-term investing is focused on assets that are held for a period of five years or more, on average. It is one of the ways to earn good returns, especially from equity related investments. Stocks, equity mutual funds and Exchange Traded Funds (ETFs) are volatile in the short term but can offer substantial returns in the long run.
What are the benefits of Long Term investments ?
Some advantages of Long Term investments are:
1. The returns can be significantly high for investors
2. Risk is reduced if investments are made systematically over longer time frames rather than quick, short investments
3. The power of compounding works best in the long term
What are the drawbacks of Long Term investments?
Some disadvantages of Long Term investments are:
1. Funds are locked for an extended period.
2. Long term investing means less liquidity and fluctuations
3. Investors need to be patient for investments to yield good results