You must also know how long you plan to stay in the share market. Are you a short-term investor? The market can still drop in the next 3 to 6 months, as some people are speculating that there may be a global recession coming. For me, a holding period of 2 years is preferred, especially if you are buying a share with good fundamentals. (Lesson No 3 – You definitely cannot decide on a market within a year). Some people believe in holding their shares for 3 to 5 years, that is what they call a short-term investment. 5 to 7 years can be a medium term, and 7 to 10 years a long-term horizon. For me, a 36-month horizon will eliminate the weekly and monthly irregular fluctuations. These are often not due to the stock itself, but more to do with the market. Remember that the stock market is often operates on sentiment alone, and investors can get spooked easily. Sadly, even high quality counters drop when there is panic in the market.
