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The Benefits of Long term Investments

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Posted by : NIFM
7 October, 2013, 6:47 PM
While short term investing may give investors some thrills and even deliver gains, long-term investors have a many benefit from: Dividends: Companies usually pay dividends to their shareholders those keep hold into their companies share for long term which increase the value of their investments. Some companies reinvest dividends with additional share purchases and increase the value of your investment further. Escape from price fluctuations: Investments for long tenure escapes from price fluctuations for any point of time. During the short-term investments, all sorts of events impact the market temporarily. As a result, markets are volatile. A person investing for the long term is not much affected by short-term instability. So, investing in good companies for the long-term enables an investor to escape factors such as liquidity, over and under valuations, etc. Benefit from averaging: Long-term investors have the benefit of rupee cost averaging on their side. They can buy shares when the stock markets are down over a long term. This will bring down their cost per share. Over a period of time this can lead to large profits. Tax benefits: A short-term capital gain, which is basically a profit you make on buying equity and selling it within one year, is taxable at 15 per cent. On the other hand, long-term capital gains are tax-exempt. This means if you keep stocks for a period over one year, you stand to gain on the tax front too. Conclusion How long you should stay invested depends entirely on how soon you would like your returns. If you are a low risk investor who wants appreciation on funds within a short period of time, stay away from investing in equities. If you want bigger and better returns and you are patient and willing to give your investment some time, equities are your best option.

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