How long should you hold a stock? I R Wealth Blog

1. In the game of cricket, you need to decide how fast or slow you are going to bat to chase the target. The decision generally varies a lot depending on the format of the game. If you are playing a 20 over the match, you need to bat aggressively, and when you are playing a test match, generally, you bat a bit slow. Your game strategy depends upon the format of the game you are playing. The game of investing is no different. Your investment plan should rely upon your investing format, whether you are a trader playing a 20 over a game or a long-term investor playing a test match. There is also a midway in the game of cricket, which we call one day match. The investors can also find themselves somewhere in between where they decide to hold stock keeping a long- term vision, and the same person trades some of his stocks on a short-term basis. The core idea is that you should create an investment plan tailored to your financial goals. Why are long-term investments good? Now the 8th wonder of the world, compounding, comes into action when we talk about long-term investing in the stock market today. The compounding process refers to the continued reinvestment of an asset’s earnings, be they from capital gains or interest, to produce additional earnings over time. An everyday investor can double his money in 5 years if his stocks are generating a CAGR of 15%. Compounding works best in the long-term game of the stock market. An investor needs to keep this concept of compounding whenever he is deciding which stocks to buy today in the stock market. Let’s take the example of Infosys. Infosys’ share price in 1993 on its listing day was around 147 rupees per share now it is trading around 1800 level the share price has returned more than 1600% (adjusted to all bonuses, stock split, etc). There are a lot of examples like this in the stock market. When we see the condition of the stock market today, we can see that Portfolios tend to suffer from selling stocks for fear of loss or sudden price drops. Short-term investing eliminates the chances of multi-bagger returns to the stock market today and in the upcoming period. Knowing the potential of your stock After knowing which stocks to buy today in the stock market and investing according to your investment plan, an investor should assess the stock deeply, let’s say, after doing all the necessary research, you buy a stock from the stock market today. Within only a few days, its stock price drops drastically. Now every reporter in the news and media is proclaiming that the business is terrible and has no future. Now that you are investing in the stock market, you should be fully confident about your fundamental analysis of the company. You should consider the fall irrelevant because the company still retains a strong financial base, and nothing has fundamentally changed within the company. On the contrary, if the prices fall, you should buy more stocks to average down your portfolio. This is only possible if you are sure about your stock assessment. The stock market today is very competitive, so it is essential to be very clear about your investment plan for stock in the stock market today. Knowing the potential of your stock will make it more straightforward for you about how long you should hold a stock in the stock market today. How long should you hold a stock? I R Wealth Blog