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Before You Start Investing: Know Your Investment Horizon — Long-Term Investment Horizon
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Long-Term Investment Horizon

Long-Term Investment Horizon

long-term investment horizon is often the way to go if you’re willing to take big risks for big rewards and have the time to offset possible losses and achieve stable profits. Long-term investments are investments you can expect to pay off after holding them for a period of several years or even decades.

For long-term investors, the ideal investment horizon is forever. Yep, you read that correctly. But note the keyword: ideal. We’re not saying to never sell your stocks, but hear us out. History shows that despite market fluctuations, if you hold a good stock long enough, its value will appreciate.

If you are a long-term investor, you should only sell if something goes wrong at the fundamental level of the company you’re investing in. Such as, huge layoffs, a natural disaster disrupting the company’s operations, or products failing consumers’ expectations. If the company has sound management, stable profits, and good growth prospects, then the long-term investor need not worry about the short-term fluctuations of the stock market or the economy.

Even if the stock takes a dive during a downturn, the price will eventually appreciate over time. Normally, with a long-term investment horizon, investors feel more comfortable to take riskier investment decisions and capitalize on the market opportunities. A longer investment time horizon also means you can take a more aggressive approach to investing.

“If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.” — Warren Buffett