The famous saying, “patience is a virtue”, can be applied to many aspects of life, your investments being one of them. Patiently waiting for your money to compound and create wealth may seem frustrating when you start. But the longer the tunnel, the brighter the light is likely to be at the end. A long term investment can be beneficial in several ways. Long-term investment in mutual fund holds immense importance in building wealth, achieving financial goals, and securing a stable future for yourself and your family members. While it does require tremendous patience, perseverance and discipline, it can make your life much more stress-free. This is because of the varied benefits of long term investment such as the potential for significant capital appreciation over time, an opportunity to ride out market downturns and mitigate the impact of temporary market fluctuations on investment portfolios and the ability to harness the power of compounding. Long term investment in mutual fund allows you to reinvest your earnings, dividends, or interest back into the investment, and increase the potential for growth exponentially.
Advantages of long term investment also include goal achievement. One of the major benefits of long term investment is that these align with achieving various financial goals such as retirement planning, funding education expenses, or purchasing a home. Another of the advantages of long term investment is tax efficiency as such investments often benefit from favourable tax benefits.
Now that you know the importance of long-term investments when it comes to a financially sound future, let us take an in-depth look at when investments begin to be considered long term, so you know how to proceed. Further, continue with a long term investment can be beneficial in several ways. Find out what these are and how these investments work.
An investment is considered long-term when you hold it for at least a year or more. Ideally, mutual fund investment plans held for three years or more can be termed long term. Certain securities like stocks, equity mutual funds, etc., can be extremely volatile in the short term. One way to lower the risk is to hold the investment for a long term. Depending on your goals, this could be three, five, 10, 20 years or even more. The long term acts as a buffer against short-term market volatility and helps your money compound more, ultimately creating a large corpus for your goals.
Long term investment can have many advantages. Read on to know more:
Understanding what is long term investment is essential for anyone aiming to achieve significant financial milestones. In simple terms, it refers to investments held for an extended period, typically exceeding five years, with the goal of building wealth over time. These investments provide the advantage of compounding, allowing earnings to generate further returns. Whether your goals include funding a child’s education, buying a house, or securing retirement, long term investing is a proven strategy to create the financial resources necessary.
One popular approach to long term investing is through long term mutual funds, which pool money from multiple investors to invest in diversified portfolios of stocks, bonds, or other securities. These funds are professionally managed, reducing the effort required from individual investors while offering potentially high returns. With a horizon of 10–15 years or more, long term mutual funds can smooth out market fluctuations, enabling investors to benefit from the overall upward trend of the market.
A clear understanding of what is long term investment also highlights its ability to align with life’s financial goals. For instance, someone planning for retirement can begin with long term investing in equity-oriented mutual funds to benefit from higher growth potential. Meanwhile, those seeking stable returns might opt for debt-oriented funds or a mix of both. The disciplined approach required for long term mutual funds encourages consistent contributions, making it easier to accumulate substantial wealth.
Additionally, long term investing offers tax advantages in India. Equity mutual funds held for over a year qualify for lower long-term capital gains tax rates. By knowing what is long term investment, individuals can make informed decisions, ensuring their financial strategies are well-suited to their aspirations. Ultimately, patience and discipline in long term mutual funds can turn dreams into reality.
A long term investment can help tackle market volatility and create wealth for various long term goals like retirement, a child’s higher education or wedding expenses, and more. As long as you buy mutual funds that fit your goals, you can expect to reach targets in the stipulated time.
An investor education initiative by Edelweiss Mutual Fund
All Mutual Fund Investors have to go through a onetime KYC process. Investor should deal only with Registered Mutual Fund (RMF). For more info on KYC, RMF and procedure to lodge/redress any complaints, visit -https://www.edelweissmf.com/kyc-norms
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.