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INVESTMENT ARTICLES

What are The Benefits of Long-term Investing?

Author: Ivon T. Hughes

It is a proven fact that one of the most effective ways of reducing the volatility of an investment, is to hold onto it. This holds true for all asset classes. The following chart highlights how a longer investment holding period significantly reduces the volatility of the average annual return of the international equity asset class.

Investment Returns for International Equities

Holding Period

In Years Low vs. High Range of Returns
1 - 21% to 65% 86%
5 2% to 37% 35%
10 7% to 25% 18%
20 9% to 18% 9%



 

 

What does this mean for you?
A long-term investment horizon is recommended for a portfolio of high-risk/high return securities. If you hold a diversified portfolio of high-risk assets such as international equities over the long term, the portfolio will, on average, have higher returns than a diversified portfolio of less risky assets such as T-bills.

See for yourself how investment risk is reduced over time by comparing the range of returns for cash, Canadian small-cap equities and international equities for 1-year, 5-year and 10-year holding periods, respectively by visiting the Efficient Investor - Learn about Key Investment Principals section of our website. You'll see a big difference in your investment returns over time.

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Ivon T. Hughes, The Hughes Trustco Group Ltd.
Online Insurance Broker - Get a FREE Quote TODAY!
Tel: (514) 842-9001 Email: [email protected] Web: http://www.trustco.ca
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