Question

Leaving your investments in the stock market alone for at least five years is a good way to reduce risk because...

A. It allows your investments to earn more interest
B. It keeps you from reacting to dips in the market and selling at too low of a price
C. Fees are waived for investments held for over five years
D. You get a bonus from the company if you invest for five years

Answer 1

Leaving your investments in the stock market alone for at least five years is a good way to reduce risk because it prevents reactive selling during market dips and allows for potential market recovery and growth over time.

Step-by-step explanation:

Leaving your investments in the stock market alone for at least five years is a good way to reduce risk because it keeps you from reacting to dips in the market and selling at too low of a price. By staying invested for a longer period, you allow your investments to recover from market downswings and benefit from the overall upward trend of the stock market. For example, during periods of economic recession, the stock market may experience significant dips, but over time, it has historically recovered and continued to grow, generating higher returns.

Learn more about Investing in the stock market