It’s an interesting question, isn’t it? Many people don’t think about holding onto shares for any particular length of time, but it should be made clear that for the average investor, it makes better sense for stocks and shares to be longer term investments.
I think the problem with this misunderstanding about shares is that some people have been seen to buy shares at a very low price and then make a killing on them a short time later. We could be talking weeks or months here.
Now it does happen, and these people will be sitting pretty as a result, it’s true. But it doesn’t happen often and to be honest it isn’t the norm. We’ve all sat there and said “if only we had invested in Microsoft/Coca Cola/Apple (insert successful stock here) when we had the chance”. But of course it isn’t that easy. We didn’t have the knowledge then that we have now, and even if we had we wouldn’t have become millionaires overnight. It’s all in hindsight.
Some of us have yet to invest in shares or stocks of any kind. Some of us don’t know enough about the stock market to put money into any kind of investment in that area. However, if you do decide to sink some cash into some shares, make sure that you research them thoroughly before making any purchases. Don’t invest any money with the idea of trying to make loads of cash in just a few weeks.
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Do You Own Stocks Long Enough to Make a Profit On Them?
If you dig for long enough you will find some nice returns made by people who have held shares for a relatively short amount of time. But these are the exceptions rather than the rule, and if you want to buy some shares (no matter what company they might be in) you should be prepared to hold them for a long period of time. I’ve done some research here and most experts seem to recommend a period of around ten years to make a good improvement on the price of your shares before you sell them.
So with this in mind, you need to think realistically about the return you could expect to get from your stocks or your investment portfolio. You also need to decide whether you are the right kind of person to benefit from holding stocks for that long. You will experience times when your holdings go down in value, depending on what is happening on the markets. You will also have times when you will see them rise. You need to keep a long term perspective and your game plan in focus during times like these. Many people have lost out because their shares have fallen in value and they have panicked and got out when they should really have held fast and held onto their shares. In the majority of cases, they would have seen their investments rise in value again.
Not everyone is going to be suited to holding higher risk investments, although you can always adjust your level of equity exposure over time. You have to be prepared to hold that long term view if you want to stand the best chance of making some reasonable profits on your choice of stocks.