Therefore, investors who put money on the market should be able to keep it there for at least three or five years, and the longer the better. If you can't do that, short-term investments, such as a high-yield savings account, may be a better option. If you can't hold those stocks forever, true long-term investors should be able to at least buy them and then forget about them for 10 years. If you're looking to invest for your future (five, 10, or 40 years off), now is the best time ever to buy stocks.
Expecting a pullback in stocks with a long-term time horizon isn't going to move the needle as much. How much will a 10% difference in your purchase price make today 40 years from now, when your original investment has increased more than 10 times? If you're not running out of funds, maintaining investment until your goals are met may be the best way to move forward. Some investors advocate staying invested for years. The investment horizon will depend on your investment strategy and approach and also on market conditions.
Looking back at stock market returns since the 1920s, people have rarely lost money investing in the S%26P 500 over a 20-year period. To boost your diversification, you can choose to invest in funds rather than individual stocks and bonds. As with any asset, you must hold a stock for a minimum of 12 months to be considered a long-term investment. Successful investment strategies generally involve a recalculation of the return on stock selection on an annual basis.
Your selected stocks could skyrocket the day you buy them, or it could turn into a loss-making investment. My research shows that, as an investor, the most logical profit-taking strategy is to sell a stock when it fails to match or exceed the returns of the S%26P500 over a period of one year. While past results do not guarantee future returns, they do suggest that long-term investment in equities generally yields positive results, if given sufficient time. Even if you are an individual investor in stocks, there is usually some part of the market that presents a good opportunity to invest your money.
You should invest in the stock market for a minimum of 10 years, as U.S. markets have always made profits over a 10-year period since 1955.Buying stocks in high-growth companies still means that you should let your investment mature for at least a year. Francis recently discovered a bond fund in some clients' portfolios that had deviated from their stated investment objective and increased returns by investing in junk bonds (which have the lowest credit ratings, making them the riskiest bonds). Yes, holding a stock for a year is a good strategy according to many popular strategies, such as Joel Greenblatt's “Magic Formula”, Buffett's Value Investing Methodology, the Dogs of the Dow, or my research on “LST Beat the Market System”.
Once you've established your investment objectives and time horizon, choose an investment strategy and stick to it.