Mutual Funds

How Long Should You Stay Invested?

So, you’ve decided you want to start investing. What next? The next step is to devise a good investment strategy that fits your lifestyle and financial goals.

One of the key aspects of an investment strategy is the duration for which you want to remain invested. If you’re in your late teens, early twenties, or even your thirties, you have a lot of control over the number of years you want to remain invested.

If you start investing a little later in life, your age starts to determine how long you can remain invested.

When you’re using the Tarrakki App for Wealth Management, you get to choose from the following investment strategies based on your chosen Investment Duration:

i) Very Long Term Investments

This investment strategy is apt for those who are looking to stay invested for more than 10 years at a stretch. This means you will not be redeeming your invested money in full or part for more than 10 years. A very long term investment strategy is ideal for someone who doesn’t lose sleep over temporary market ups and downs. This investor knows he’s in it for the long haul, and is unaffected by day-to-day market volatility. Most users use this strategy to build wealth and save for retirement.

ii) Long Term Investments

The long term investment strategy is ideal for someone who is looking to invest for a duration of 5 to 10 years. Such investments are often done for children’s higher education, paying the down payment on a house, or starting a small business. A long term investor does not redeem his investment in part or full for at least 5 years. He is prepared to wait for the stipulated time duration in spite of day-to-day market dynamics.

iii) Short Term Investments

A short term investment strategy is for those who want to keep their money invested for a period of 1 to 5 years. This kind of investment is often done by people who are looking to buy a vehicle, plan a wedding, or build an emergency fund. Short term investors may be affected by bouts of market volatility from time to time, but this usually tends to be more psychological than real. To mitigate risks, a good investment advisor will recommend parking money in debt funds rather than equity funds, for short term investments.

iv) Very Short Term Investments

A very short term investment strategy is specifically for people who want to accumulate a fixed sum of money, usually to purchase gadgets, short term certificate courses, gifts for loved ones, home appliances, and other similar products and experiences. These investments are not ideal for purchasing things that are very expensive. Start an SIP with a Very Short Term Investment strategy instead of paying for things through EMI. This saves you from the burden of debt and interest payments.

Put pen to paper, see what your immediate, medium term, and long term needs and desires are, and how much they amount to, in terms of today’s currency. The Tarrakki App will give you inflation calculated smart recommendations to help you meet each of your goals.

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