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Long-term Investments, How they work?




Surely, Long-term investments are a great way of planning for the future. It is a comfortable way to create a nest egg for retirement or even save to send your children to university. Despite the carnage that we’ve seen on the stock market in recent years, equities are still considered to be smart long-term investments. Acquiring a diversified range of stocks, either individually or through an exchange-traded fund, can deliver far healthier returns than what savings accounts have to offer.


Given how the interest rates offered by high street banks are at record lows, you’re going to want your money to work for you. Your long-term investment strategy must involve patience, and an acknowledgement that there may be some choppy waters along the way. Attempting to hop in and out during times of turbulence is often the worst thing you could do. And as we’re about to find out, entering into this commitment without the right mindset can be extremely costly.

For Long-term investments crunching the numbers is a great way to look at it , downturns are perfectly normal. Indeed, since the 1920s, we’ve typically seen one every six years.


Despite the uncertainty and fear that bear markets bring – mainly due to everything from the dot-com bubble to Covid-19 – stocks have consistently risen over the long term.

If the funds were left completely untouched, any lump sum of money would have ballooned. Missing the five best days means this pot would be worth just $426,993, missing 10 would see the savings tumble to $318,036, missing 30 days sends it down to $125,080, and the investment would be worth just $57,382 if they missed the 50 best days. Just think about it: missing just 50 of 9,987 trading sessions had the potential for this would-be investor to lose $602,000.


Certainly this is enough proof of why long-term investments are best left alone, I don’t know what is. The best long-term investment strategies involve snapping up stocks when they are at bargain basement prices. That way, you have an opportunity to benefit from explosive growth when the market roars back to life


What do you think about these ideas? Leave your comments below!

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