Past performance shows that stock investors
with 20 years or more to invest have an extremely good chance
of not only beating every other asset class, but of also beating
inflation. This is an especially powerful argument for long-term
stock investing when you realize that these figures aren't
for holding only the top performing stocks, but for holding stocks
as an asset class , regardless of how many times you change the individual
issues in your portfolio. (This doesn't mean, of course,
that you can't lose money on a particular stock if it's
been in your portfolio for 15 or 20 years.)
And while 15 years or more may seem like
a very long time, it really isn't when you consider that
the life expectancy for women at age 65 is more than 20 years,
and for men is more than 16 years. Indeed, it's not uncommon
for people who begin investing in their 30s to remain invested
for over 45 years. And even people who begin investing in their
40s or 50s may stay invested for 20 or 30 years, or more.
Jeremy Siegel, The Wharton School
Jeremy Siegel of The Wharton School describes the benefits of a long-term investing strategy.
The lesson of
history is that those who are willing to commit to a long-term investment
program in stocks are unlikely to lose their investment capital and, in
fact, are likely to add significantly to it. The trick is to stay invested
even when the market is moving against you, and to use diversification to damp down risk to a level you can live with.
Jeremy Siegel, The Wharton School 