We generally define investment of more than 5 years as long-term investment.
This length exceeds the investment time of most individual investors.
According to the statistics of the World Federation of Exchanges, the average holding time of retail investors in stocks fell from more than 5 years in 1975 to less than 8 months in 2016.
The same is true of stock funds.
There was a fund manager who introduced a data in his live broadcast.
The performance of this fund manager's fund in the past five or six years ranks among the top 5% of all funds, and the performance is not bad.
However, less than 0.4% of investors have held his stock fund for more than five years.
If it is other ordinary stock funds, there will be fewer people who stick to it for five years.
Therefore, long-term investment is much more difficult than most people think.
Most investors give up when they encounter fluctuations or short-term performance is not ideal in the past half year.
Why insist on long-term investment?
First, long-term investment can overcome market fluctuations and gradually stabilize investors' investment returns.
The probability of profit will be greatly improved after holding for 3 years.
And the longer the investment time is, the closer the return is to the average return.
Long term investment can make investors more stable to get the return they should get.
Second, Many projects in the world need long-term investment.
For example, when Apple first released the iPod in 2001, the sales volume was far lower than expected.
Apple's share price fell by 25%, but at that time Apple still supported Mr. Jobs to continue.
It proved its value later. After the launch of the last iPod, 390 million iPod were sold worldwide.
Apple has enough financial resources to stick to the success of the iPod.
However, there will be many similar projects in the world that will die because of lack of financial support.
Most investors want to pursue short-term deterministic returns.
However, many long-term projects need to take more than 5 years to promote.
If only projects needs long-term investment, but there is no money willing to make long-term investment, it cannot be promoted.
Although the average investment cycle of individual investors is very short, there are also funds in the world that are willing to invest for a long time such as pension funds, insurance companies, etc.
Whether pension funds are willing or not, they need to provide a stable source of cash flow for people's lives for decades after retirement.
Of course, there are also a few individual investors with good patience or wealthy families who have successfully realized long-term investment and wealth inheritance.
For example, Warren Buffett, whom we are familiar with, is the most classic long-term investor. Buffett has bought many excellent companies for decades.
In addition, like the famous Rockefeller family in the United States, they have been rich for six generations through long-term investment.
Therefore, long-term investment is not the patent of institutions.
Individuals or families can also do well if they have mastered the skills of long-term investment and asset allocation.
