We prefer to call this investment as “Patience-Is-A-Virtue” investment. This stock investment runs not less than 5 years and to forever if you want to. Study shows that long-term investment is more profitable in the long run than any other trading classes.
So, how do you actually earn if this takes a really long time to gain?
Well, think of scalping or day trading where you enter and exit the market several minutes or hours daily. First off, in trading your probability of losing is almost second nature, though your probability of earning is frequent. At the end of the day if you sum it all up, some traders finished strong, some others break-even and some (even most) end up incurring loses instead of gain. Let’s say, you finished the trade break-even with little gain, question is, will that be able to pay the stress and the head-ache you have taken on during the day?
In investing, you might virtually not notice your gain since you are not getting tabs on your stakes as often. In fact, investors check their stocks on quarterly basis. Of course, long-term investors incur momentary loss. But they don’t mind since they are investing on the long-term trend of the market not the short-term trend the traders are vying on. In fact, go check a blue-chip company, like Apple, Netflix, Tesla and the likes and lay down the last 5 years of their stock performance.
You’ll see that the overall trend is going up. Of course, their are some rough edges along the way, and this is where quick traders get mangled. But for investors, they just shrug and dust it off since the real pecuniary target is way up there – at the end of the rainbow.
Again, don’t think of the stock market, neither blue-chip companies as foolproof. Or you’d be a fool to consign your whole financial welfare to it without a doubt. As always, financial portfolio diversification is another name of the game in the wild world of the financial market.
Secondly, traders constantly pay broker fees (also known as spreads) every time he or she closes or opens position. And this does not include loses, since either you gain or loss you still incur broker fees.
But is trading all that awful? Not exactly.
It’s funny that you can have both worlds if you want too. Trading is fun and financially gratifying only and only if you have high tolerance to stress, odds on your side, you are expert/experienced and loses are not even an issue to you. If you like trading for its own sake, gain or loss, no problem.