How often do you hear the advice to do long term investment. They say the smartest thing to do is to buy and hold because market always come back; stay invested and you will outperform 90% of the fund managers.
Should you believe long term investing?
Long term investing seems to make sense in the first place. After all, if you want to invest for your retirement, that is for long term right? There are many empirical studies with 20 to 30 years historical data to justify this argument. It says that if you were an average investor and held a basket of index stocks, you are almost certain to make money if you stay invested for long enough.
But the truth is, traditional way of long term investment is not suitable for most people, and it will almost always cost you big fortune, especially in today’s market.
Here are the top 3 reasons…