5.23What is long-term investing?
1What is it?
Long-term investing means buying good businesses (or index funds) and holding them for years, usually 5 or more, to benefit from business growth and compounding.
2Why does it exist?
Over long periods, share prices tend to follow profits. Short-term noise matters less, and costs and taxes are lower.
3Stock market example
An investor who bought the Nifty 50 at any point and held for 15+ years has historically seen positive returns, though past performance does not guarantee the future, and there were painful falls along the way (2008, 2020).
4Quick revision
- Hold quality for years.
- Ride business growth and compounding.
- Lowest cost and stress.
5Knowledge check
Q1. What drives long-term share prices?Show answer
Business profit growth.
Q2. Does long-term investing avoid all falls?Show answer
No. You ride through them.
Q3. Typical horizon?Show answer
5 years or more.
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