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: info@trustco.ca
Web: http://www.trustco.ca
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