One of the main concerns for any type of investing is market volatility. Volatility measures the degree to which prices change over time. Another way to think of volatility is in terms of price swings. The greater and more frequently an investment’s price swings, the higher its volatility. Investments with high volatility have a high degree of risk because their prices are unstable.
Let Your Money Make Money
The advantage of long-term investing is found in the relationship between volatility and time. Investments held for longer periods tend to exhibit lower volatility than those held for shorter periods.
Tax Advantages on Capital Gains
The tax on a long-term capital gain is almost always lower than if the same asset is sold and you realize the gain in less than a year. Because long-term capital gains are generally taxed at a more favorable rate than short-term capital gains, you can minimize your capital gains tax by holding assets for a year or more.
It’s Easy to Succeed with the Right Steps
You don’t need extraordinary trading skills or savvy financial know-how to remain invested over the long-term – all you need is a great dose of patience and a strategy to make the most of your returns.