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If you listen to Warren Buffett then the best holding period for stocks is forever.  Plan to invest in them early.  Plan to use only the dividend income for consumption.  Plan to leave them in your estate.  You could go a step further and leave them in a trust!

The problem with most of us these days is that we start too late, and therefore we have no choice but to consume our savings.  If we left our investments alone for the most part, they would grow to a size that would be able to accomodate consumption and still grow.  It's all in the percentage growth versus the percentage consumed. 

The other factor is hanging on to bad investments for too long.  First of all, I think that investors are too quick to act getting into investment positions.  They will act on a tip from a co-worker or a headline in the newspaper, without conducting any research - I think most people do more research when they purchase a vehicle worth $30,000 than when they put $50,000 into investments!  Certainly, everyone I know does a lot more reasearch on a holiday destination as compared to retirement planning.  Most people take their advisor's word for it, which is fine - that's what you hire them for, but doesn't it make sense to ask them to substantiate their recommendation?  the sad part is, if a mistake was made in the selection process, investors hang on too long.  Their advisors make it worse by telling them that they should because it's hard for them to admit their mistakes - I wish advisors would just come clean and admit that they made a mistake and recommend a change.
Worse still, they will recommend you sell a perfectly good investment, so that you can invest the proceeds in something else - guess what, everytime you sell and reinvest, who makes money?  No wonder, the world is truning more and more towards fees for advice rather than brokerage.

If you have a winner hang on to it.  If you want to free up your money, sell the amount that gives you your original pricipal back and leave your profits invested.  That's my advice.



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