long term investing and compounding

short term or long term that is the question :) surely it depends with the personality of the person but ofr me i like to invest in the long term. i dont just buy stocks but i buy companies! everytime you buy shares of stocks in a company it represents part ownership in that company and thats why i buy :) the longer your holding period the less vlolatility comes into play. well now the problem is how to get the right price to buy in order to get a good return :) i will talk about that next time :) most of the people that trade or invest in the stock market are short term players. :) you can seldon see long term investors nowadays. :) but when your investing for the long term one of the tricks is compounding :) i learned of compounding when i was in college and it changed my life :) it is really simple just like putting your money in the bank. the longer the holding period the more compounding comes into play and becomes more powerful :) it is like a giant snowball!!! :) i will show to you some numbers. lets say you have P1,000 and you decide to invest it in a bank at 6% interest per annum. after 5years your money will be worthP1,338.23 10years since your deposit date it will be worth P1,790.85 in 15 years P2,396.56 in 20 years 3,207.14. your money grew over 3times in 20 years.we could now apply this into stocks. lets say you bought urc at the start of the bull run which was around 2004 and its shares were trading P5 and after almost 3years its now trading at 19.50! almost 4times and im not even mentioning that it declared cash dividends 3times and a 15% stock dividend. what is its compounded rate? 57.5% imagine that????? in year 3years time it beat the retunrs of a 20 year time deposit in a bank. and another story ict wow! if you bought it at the end of 2000 it was trading at P1 it was during the time when there was so much political crisis in our country and now its trading at P20! imagine that?!?!?! thats 64.75% compounded return :) i have shown you here some of the benefits of investing for the long term in a great company :) we could also apply this in our daily lives. you wanna buy a car.... lets say a nissan x-trail. theres 2.5 liter and a 2.0liter kind the difference between the two is a 100k. if you buy the 2.5liter type did you just lose 100k? no you lost more than that! ill show you. the 100k more that you spent to get the higher model is worth the money you lost on other opportunities....in economics opportunity cost :) if you put it the stock market and got a 15% return.....
in 5 years you lost P201,135.72
in 10 years you lost P 404,555.77
in 15years you lost P813,706.16
in 20years you lost P1,636653.74
in 25years you lost P3,291,895.26
if you put it in the stock market and got a 20% return you would have lost...
in 5years you lost P248,832
in 10years you lost P619,173.64
in 15 years you lost P1,540,702.16
in 20 years you lost P3,833,759.99
in 25 years you lost P9,539,621.66
as kid my grandparents on both sides who experienced the war were very thrifty but of course they are not misers and they always said to always save for a rainy day. they might not have been aware of it but they were comounding their savings :) but now we have the stock and we should take advantage of good investments that come our way :) by comopunding it doesnt mean the you shouldnt eat or buy new clothes coz youd rather compound your money. you should also enjoy the things that money could buy and not be a slave of it :) i hope i have inspired you to invest some of your money in the philippine stock market :) i love investing and i will do anything to promote, educate other people and help in the advancement of investing in the philippine stock market :) good luck! godbless :)