HOW LONG IS A LONG TIME?

This "Financial Focus" column is prepared by Edward Jones Investments, headquartered in St. Louis. Jones includes branches throughout the nation, including Cape Girardeau and Jackson.

Time can be our best friend. It can make good things better and unpleasant things fade away. Historically, time has also rewarded investors.

A concern of many investors, though, is how much time is enough. As people get older, they're even a little reluctant to buy green bananas. After all, we don't want to miss out on enjoying the fruits of our efforts. So, how long is long term?

Gamblers say the longer you stay in the game, the higher your chances of losing. That's because the odds are in favor of the house. But investing in the stock market is the opposite: The longer you stay in, the better your chances of winning, because the odds are on your side.

To understand how time has historically increased your odds of winning, it can be helpful to look at mutual fund performance in time blocks. Consider the 63-year history of one of the largest, most popular mutual funds, divided into 10-year periods. The first 10-year period began in 1934 and ended in 1943. The second began in 1935, ending in 1944, and so on. This fund has had 54 10-year periods. It's also had 59 five-year periods, 62 two-year periods and, of course, 63 one-year periods.

Looking at one-year periods, if you had bought the fund every Jan. 1 and sold it every Dec. 31, you would have achieved a gain 67 percent of the time. If you had held the fund for any two-year period, your odds of winning were 82 percent. Five-year holders had a 95 percent chance of winning, and those long-term investors who held the fund for any 10-year period won 100 percent of the time. Every 10-year period in this fund's history has rewarded investors with a positive return.

There are no guarantees in investing. Every time you make an investment, you take some degree of risk, but if you decide to bury your money rather than invest it, you risk losing it to inflation. Which risk would you rather take?

The good news is that time is your friend. With high-quality investments, the longer you invest, the more you spread your risk. Each year you give a good investment to grow, history shows the odds of winning get better.

The Southeast Missourian does not recommend that readers buy or sell stocks featured in this column, which is provided for informational purposes only.