2006-10-18 11:45:49 · 6 answers · asked by Graziela C 1 in Business & Finance ➔ Other - Business & Finance
Stocks are a long-term investment because they're really all over the place. One day they're up, another down. If you do NOTHING else, you might be able to skate around and take advatage of all these short-term fluctuations, but most people are busy doing something else.
So if you ignore the short-term fluctuations, there are some long-term trends. But it takes a pretty substantial term for all those short fluctuations to average out. I think the very minimum recommended investment time in the stock market is considered to be something like seven years or more.
If you can wait that long and you aren't likely to need your money out exactly when you ask, stocks can be a very good overall investment, so long as your holdings are diversified enough. Otherwise you may take a bath in some temporary downturn, or if your investments are too narrow you may lose everything if the company expires (as many did with Enron).
Hope that helps!
2006-10-18 11:51:57 · answer #1 · answered by Doctor Why 7 · 0⤊ 0⤋
I don't really agree that stocks are long term investment. If you buy volatile stocks and sell it in a week or so or if u are are an intraday trader, then your stocks are not long investment, they become more like trading activities instead.
Stocks have LONGER holding period than cash of course. The longer you hold to your stocks the more risks you are taking such as your market risks, liquidity risks, credit risks, political risks, etc.
2006-10-18 19:24:31 · answer #2 · answered by Andrew H 1 · 0⤊ 0⤋
Stocks are considered a long-term investment for the small investor because of the commissions you have to pay to buy and sell and because the price of stocks goes up and down very frequently. For example, you might buy a share of stock today for 10.00, tomorrow it might be worth 5.00 and next week it might be worth 15.00. Although, stock values go up and down, over time the value on most stocks increase.
2006-10-18 18:59:08 · answer #3 · answered by bettyswestbrook 4 · 0⤊ 0⤋
In order to take the advantage of Dollar Cost Average to reduce the investment risk for smaller investors.
2006-10-18 20:59:42 · answer #4 · answered by Business Owner 1 · 0⤊ 0⤋
The majors rarely go off the board completely, so you always have a chance for a comeback.
2006-10-18 18:48:27 · answer #5 · answered by The Advocate 4 · 0⤊ 0⤋
Lottery tickets pay off quicker
2006-10-18 18:47:41 · answer #6 · answered by ste q 1 · 0⤊ 0⤋