How
long is long term?
Dhirendra
Kumar answers:
Once
upon a time investor's had ignored their investments for years and decades. It
also turned out that many of these investors had actually died at some point.
The best Strategy was to invest and forget. Do nothing like a dead person.
The
GOI considers one year for listed stocks and equity MF, for other assets the
limit is three years.
Now
the question is when it comes to equity what is the actual long term.
Equity markets move in cycles...it takes 5 to 7 years to go through a full cycle of sharp rise, decline and stagnation and back. To get the right levels we need to invest through the whole cycle.
If
you invest in SIP over 4 years then your risk of a loss is negligible.
The
shorter the period, the higher the potential gain but the worse the
possible risk. Long Term is not a vague rhetorical term.
Therefore
5 years or more is long term.
Source:
ET Wealth, 10-16 September, 2018
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