Many distributors of mutual funds and financial consultants frequently advise investors to invest for the long term. In the case of certain mutual funds, such as equities and balanced funds, this is particularly true.
Let's examine the rationale behind the pros' recommendations. What actually transpires over time? Is it advantageous to hold investments for a long time?
Think of your mutual fund investment as a top-notch batter. Every good batter has a certain batting style. However, if he plays for many years, every good batsman can amass a large number of runs.
We are discussing a "good quality" batsman's track record. Every excellent batsman will experience both strong and weak performances. The record would be impressive on average.
A solid mutual fund will have occasional ups and downs, typically as a result of variables outside the fund manager's control. A long-term investment in these funds would be advantageous to the investor.
Therefore, invest for as long as you can afford to, especially in equities and balanced funds.