Investing in Mutual Funds with a long term objective is a favorable option as it gives investments time to grow. Investing with a long-term horizon is very important, especially for those who are into equity linked Mutual Funds, as it balances the risk of volatility to a great extent. Long term investments lower the market volatility, and at the same time maximize profits. There are a lot of tools like ET Money’s Mutual Fund calculator to help you understand how long term investment can help you stay financially fit in the future.
What exactly is Long term investment and what other benefits it offers to investors?
Long term investment involves parking money in different assets like mutual funds, securities, shares and stocks for a longer term which exceeds more than a year reaching up to a span of 3, 5, or 10 years. Many would find locking their money for such long periods not a feasible option, but it is definitely worth it as your money works for you in the background, giving you enough cushion at maturity. If long term investments are done wisely, they can fetch Impressive returns which can balance out the future expenses in a better way.
What are the major advantages of staying invested for the long term?
Long term investments most certainly help in reaping proper profits unlike short term investments. The amount of time helps in achieving your financial goals as with time the instrument that you have invested in reaches its peak giving substantial returns. Secondly, it gives your investments the power of compounding, which is surprisingly one of the major benefits of staying invested for a longer period of time. Furthermore, the risk of losing your investment is less in long term investments.