Holding period

How long you keep an asset before selling it.

Example

A three-year holding period on a stock, versus a three-day one.

Important

Tax treatment, exposure to loss and the odds of a positive outcome all change with holding period - a genuinely good asset held for the wrong length of time can still lose money.

Related terms

• Investor — Someone who buys an asset expecting to hold it long enough for the underlying business or asset to create value.
• Trader — Someone who buys and sells based on expected near-term price movement, not on the underlying asset changing in value.
• Time horizon — How long before you plan to spend the money you are investing.

Lessons that explain it

• Investor versus trader — The words get used interchangeably, but they describe different time horizons, different skills, and very different odds. (10 min)
• ROI, and the one thing it leaves out — Return on investment is the simplest measure there is, and it is silent about time. Two investments with the same ROI can be wildly different propositions. (9 min)
• Time-weighted and money-weighted: two true answers — One measures the decisions about what to hold; the other measures what actually happened to your money, including when you added it. They can disagree enormously. (13 min)
• This asset class replaces an income, it does not just diversify a portfolio — Small-business ownership belongs alongside the decision to work rather than alongside a bond allocation - it is concentrated, illiquid and labour-intensive by nature, and pretending otherwise is how it ends up compared against the wrong alternative. (9 min)

All 578 terms in the Investing glossary