₹"Our favorite holding period is forever."₹
Compounding means when the interest income earns more interest.
In Equity or Equity mutual fund —-> there is no interest income ( either Fixed or variable )
Mutual fund works by appreciation of NAV
how does NAV appreciate ?
When the constituent prices of underlying stocks increases + dividends received from constituent stocks. + Any Arbitrage income + Any debt instrument appreciation
So one needs to understand how it works.
Equities are no doubt risky
But there is risk in everything
Keep money at home —-> long run it gets converted into black
Keep money in bank ——> Interest rate risk
Invest money in real estate ——> market fluctuations, encroachment, legal issues
Buy gold —-> more riskier than Equity
So take calculated risk and invest as per goals. Diversify your investment and stay invested.
Equities will definitely help you fulfill your goals provided you are dedicated, disciplined, rebalance your portfolio and run a long course.