How long is long term investment?

In all the previous posts I have been saying to invest in the long-term for equity. Ask any good financial planner, they will also say you should invest in the long-term. So you can ask how long is long-term? 1 year? 5 years? 10 years? 30 years?

Actually, people have analysed past data from sensex from 33 years and have found out that holding your investment for 7 years yields the maximum return irrespective of the time you have started investing (in a bull/bear market).

They defined targets with 8% (average inflation rate), 10%, 12%, 15%, 16.2% (33 years market average return). Staying invested for minimum 7 years is all it takes to hit these targets.

Does this mean you take out all your money after 7 years? No. Of course not. The longer you stay invested, the better your returns are. The famous example always given is “if you bought 100 shares of Wipro for Rs. 100 each (Rs. 10,000 investment) in 1980s, it would’ve grown to more than Rs.535¬†crores by the year 2014.” Phenomenal growth by just staying invested for 34 years.

Remember that when you think you want to make money in short-term.

 

One thought on “How long is long term investment?”

Leave a Reply