One of the most important things to consider when evaluating competing investment opportunities is time frame. How long can you keep this investment locked up and working for you? The majority of returns to be gained from an investment opportunity take time to strengthen and build. Constant vacillation between investments and failing to commit and focus steals away this chance to grow and compound. True wealth is gained in the long term; not the short.
When considering investment opportunities your ability to keep one investment longer than another should be included in your evaluation. A key to Warren Buffett’s staggering fortune is his ability to compound money at 23% a year for 30 years.
If his time frame was just 5 years 23% isn’t that impressive; doing it for 30 years yields the title of richest man in the world.
The Message here: Seek compounding returns that you can repeat on the long term not the short term flash in the pan.